Emmanuel Daniel, The Asian Banker (ED): I’ve been speaking to fintech originators and the entrepreneur community that has been building the fintech proposition around the world. When did Landbay start this peer-to-peer (P2P) lending platform?

Gray Stern (GS): We started working on the business back in August 2013. It was very nascent, an acorn of an idea at that point. It took us about six months to settle on lending against Buy-to-Let property, and another two years to get to this point. We could classify this as our proof of concept stage.

ED: And that’s because unlike other lending platforms that are more of a consumer credit type of businesses where there are no assets at the back-end, you had the need for legal documentation and infrastructure to be put in place?

GS: That’s correct. We went into this business first and foremost looking at the quality of the credit that we’re going to offer our clients. We looked at being a traditional mortgage lender first, which requires a quite complex infrastructure to be put in place, a lot of relationships in terms of servicing loans, legal documentation, valuation, and a framework to potentially enable us to offer our mortgages through capital market securitisation.

ED: Which is what you want to do eventually.

GS: Yes, at this stage we’re originating some of our debt into a rated warehouse that will be securitised, but ultimately we would like to get a balance between retail investment and institutional investment. There’s a lot more value in building a retail brand for a business like Landbay.

ED: I want to distinguish what you do and what other players in the UK such as Zopa and Lending Club do today. You are different only in that you are an asset-backed lending platform. You talk about cost of funds as if you have to be the lender of sorts. In a P2P environment, I don’t see the need for cost of f...