Going to extr r
Neil Roberts, head of New Zealand’s first peer-to-peer lender is going head-to-head with the banks, he talks to Rob Stock.
NEIL ROBERTS is a hunter after extreme value.
He is about to press the go button on Harmoney, the country’s first peer-to-peer lender, challenging the banks for a slice of the ‘‘prime’’ personal loan market.
Peer-to-peer lending, or P2P as it has become known, is an internetage business , with P2P services facilitating loans from investors to borrowers directly, cutting out banks.
P2P promises lower borrowing rates for those seeking personal loans and higher-than-bank returns for lenders, who can also keep their capital risk down by spreading their investment over many, many loans.
New Zealand lags Australia, the UK and most of Europe in P2P, so the launch of Harmoney is a milestone.
‘‘From a career perspective, this has probably been the most challenging and rewarding thing I have done to date,’’ says Roberts, who set up Pacific Retail Finance (PRF) for Noel Leeming Group.
‘‘It has certainly had its moments when things have got pretty tough and you think, ‘I can’t see a clear way of solving that issue, and is that issue going to prevent us going on at all?’’’
There has been a personal price for him and his team, some of whom have now been together for 14 years, and many of whom were involved in the PRF launch in 2001.
‘‘In these projects, it doesn’t matter what environment you are in, you dedicate your life to them,’’ he says. ‘‘It does take over a little bit for a time. You are trying to create extreme value, otherwise what’s the point of bothering at all?
‘‘If you are trying to create extreme value over anyone else in the marketplace for your customers and your shareholders, and anybody else who works in the business, then you have to be looking for that value, and be seen to be the person that’s going to give up your own personal time to execute it.’’
By his count Roberts and his team have helped create ‘‘extreme value’’ three times already. The first was at lender AGC, which GE Money ended up buying.
‘‘I joined AGC to turn around their insurance business, which I did very quickly. It took me about six weeks,’’ he recalls.
That was fun, but then he hatched a plan which he was frustrated to find the AGC board rejected.
‘‘I saw there was high, high demand for personal loans, and people putting up with very low service, and that there wasn’t a huge amount of sensitivity around the pricing of it.’’
His plan was to build a direct-toconsumer loans business enabled by technology, which would process loan applications in minutes, not days. It was inspired by his early career in insurance in the UK during a period of massive change, when the old, adviser-led model of selling insurance was being replaced by direct-to-the public sales.
‘‘I had seen first-hand how you could revolutionise an industry using technology and automation to cut out costs and deliver a better service,’’ Roberts says. ‘‘Being a good corporate citizen, I worked up a plan, and put it to AGC.
‘‘They basically said, ‘Yeah, we understand. We can see where you are going, but it’s too much risk, and we don’t like change.’’’
Noel Leeming Group saw the potential, and PRF was born.
‘‘We could give a yes or a no to people within about seven minutes,’’ Roberts says.
The loans industry’s standard turnaround time was much longer, more like a week or so, Roberts recalls.
PRF had applications in the next five years of $3 billion, wrote $1.6b of loans, and generated $100 million profit before tax, before GE swooped again. That counts as
‘From a career perspective, this has probably been the most challenging and rewarding thing I have done to date.’
extreme value creation No 2.
No 3 was a stint he spent in Sydney when involved with an Australian business called FlexiRent, which he helped build up and float on the ASX. It’s now worth more than A$1.1b.
Roberts says he’s always been driven. Raised by a single mother in Wales, money was tight in his childhood, but it wasn’t a life of privation. Roberts, who has not the slightest hint of a Welsh accent, says he was fascinated by business from a young age.
‘‘I have a love for business, I really do,’’ he says. ‘‘Fifteen-yearold me was fascinated by business. He was like a sponge. I really did believe, and I didn’t come from affluence at all, that for me hard work was a ticket out of not being well-off.’’
Ironically, for a seller of debt, he has been personally debt-averse, saying he attacked his own mortgage with gusto.
‘‘I probably took it to extremes, before buying furniture, before buying a car,’’ he says.
But it’s the challenge that motivates him now, not the money.
‘‘I’m in my 40s now. I have a son on the way, I really want to do something that is worthwhile,’’ he says, adding he doesn’t mean to imply what he had done before wasn’t. ‘‘But we have the time and the opportunity here to create something special, and give a lot of value back.’’
The plan originally was to use technology to build a better debt collector, but as he ‘‘champion challenged’’ that idea, he came back to P2P, which he had watched grow around the world.
‘‘We saw the embryonic signs of almost an en masse consumer movement . . . There was a definite heartbeat there that was very strong.’’