A Lending Makeover

Sophisticated investors are always on the hunt for the new thing—whether it’s an emerging technology; a breakthrough in the way we communicate; a pharmaceutical product that cures, saves or enhances life; or an alternative source of energy.

Things that never existed before live up to the definition of “new” and can produce wildly successful profits for early investors. But as disruption is laying its wake through traditional industries and business sectors (Uber upending transportation; Airbnb, lodging; Trulia, real estate), one financial play of tomorrow may exist in finance itself: Consumer lending is getting a makeover aided by technology and refined by peer-to-peer groups.

Moreover, there is an inherent ethic in peer-to-peer lending that positions it nicely for the millennial crowd and those who want to make a difference with their money—impact investing types.

By eliminating the legacy bureaucracy of banks and financial institutions, lending groups can provide access to capital to a larger swath of the consuming public who are turned off and often turned away from traditional institutional lending approaches.

Beyond further servicing the retail market’s credit needs, these lending groups can also service investors’ needs by positioning themselves for intermediary investments. “Our mission is to keep the peer investor in the P2P markets,” says Bo Brustkern, co-founder and CEO of NSR Invest, a lending platform that connects investors and borrowers and which provides a plug-and-play marketplace for financial advisors. He says institutions have largely taken over the P2P sector from an investment perspective. Yet it is advisors who hold the keys to discretionary capital. “We arm [financial advisors] with tools to participate in the P2P marketplace,” he says.

To that end, NSR provides a unified peer-to-peer investment platform for financial professionals. It even translates terms into familiar financial services industry language: higher returns, lower correlation, transparency, fees, etc.

The platform is dubbed an “investor service platform,” and this is how it works: Borrowers apply for a loan through an origination platform (such as Lending Club). If approved, the loan is listed at Lending Club, where investors can choose to invest in the whole loan or a small fraction of it (as little as $25 per note). The NSR platform “sees” these loans as soon as they are listed and scores them based on dozens of borrower attributes. NSR then quickly invests its clients’ money in the loans with the highest scores.