Tech perseverance and a little
luck created it
The click-and-collect mortgage
We’re dedicated to helping you disrupt your markets. Or cope with it when the inevitable happens. And to help with a little insight and inspiration of how it’s done, we’ve created the Virgin Media Business Disruptor 10 list, in conjunction with Fast Track 100 – as published in The Sunday Times.
Here, in the sixth part of our 10-part series, we learn that disruption can sometimes be a happy accident – if you’re very lucky, like LendInvest.
Banking on disruption
It was the start of the global recession. With markets in freefall, financial giants were stuttering or crashing. Only the foolhardy – or incredibly brave - would consider creating a new kind of financial service.
Regardless, LendInvest founders Christian Faes and Ian Thomas began to formulate the idea for what has become one of the biggest online lenders in the world, offering a range of property finance and mortgage products that are applied for and approved online.
Their courage paid off. Christian admits even he couldn’t have foreseen LendInvest’s success. Despite the depressing backdrop, much of it was down to good fortune - as well as an undeniable business nose and hard work.
An accidental disruptor
Christian says: “In some ways, launching at the start of the credit crunch was the best time. Our advantage was that others fell by the wayside, but we stuck it out. It was a hard slog, but we got there. We didn’t plan to make the impact we have had. We’re an accidental disruptor.”
As with many businesses on the Virgin Media Business Disruptor 10 list, tech innovation has played a defining role in LendInvest’s story. Without it, Christian admits it would have been impossible to progress what was little more than a clever concept into a thriving lender that is shaking up the £1.3trillion mortgage market.
Apply online, anywhere
Christian says: “Our use of technology is key to our disruptive ability. We saw online lending was taking off in other markets and thought we would try to apply some of the same principles to property. It all stemmed from the simple fact that you couldn’t apply for a mortgage online. If you click on a bank’s mortgage tab on their website, it only took you through to an online booking tool for an in-branch, face-to-face application process. The more people we talked to, the more we realised this entirely offline market had to change. We have found ourselves at the forefront of that space and our focus on building tech to take us online has supported phenomenal growth in a short period of time.”
Speed has indeed been another essential ingredient in LendInvest’s recipe for success. By placing the notoriously drawn out mortgage application process online, the firm can provide faster decisions than more traditionally-minded banks.
A win-win for both parties
Christian says: “On average, borrowers can secure finance within 14 days. The industry norm is about three months. A typical scenario would be someone buying at auction. They put down 10 per cent on the day and have 28 days to complete. A bank can’t complete in that timeframe, while, in contrast, in some cases we can provide funding in less than seven days. Such speed means a win-win for both parties. The customer gets their mortgage and we consolidate our dominance in the market.”
In just three years, LendInvest has captured 10 per cent of the UK’s short term mortgage market. While larger and long-established banks are sitting up and taking notice, Christian feels their processes are too cumbersome for them to pose too large a threat to LendInvest’s position.
He says: “These banks are thinking about building technology, they are even talking about it, but they are not progressive. They are laden with bad legacy systems that have been around forever, so for them to rebuild the mortgage from the ground up is very difficult. They see the risks, but not the rewards. Banks also have a branch structure. They’re not going to do away with that. They are stuck; in a quandary. Meanwhile small competitors are literally burning money to gain market share. I think we are creating a more financially viable, sustainable business that has grown in a fair but not super-aggressive way.”
Expanding into a niche
In 2015, LendInvest secured £22m from Beijing Kunlun, one of China’s biggest tech companies. This year it raised £17m from London investment firm Atomico, which has provided tech input from ex-Skype and Google personnel. Having cemented LendInvest’s position as a disruptor, its founders are now determined to keep disrupting. There are dozens of property finance products which Christian believes are ready to be shaken up.
He says: “We are a property obsessed nation. At LendInvest we are looking to establish a foothold in the buy-to-let market, which is worth about £30bn in the UK. It’s not going to happen overnight but buy-to-let has the potential to become a high yielding, online lending niche. Expanding into those niches is where we will go next. It’s dumbfounding how few people are looking at this. We are only scratching the surface of what is possible.”
That’s the disruptive spirit, Christian. And we know you don’t lack the confidence to pull it off.