Cloud-based UK peer-to-peer lending platform MarketInvoice is moving to a Microsoft Azure-based platform as a service (PaaS) to cope with increasing demand.
The company currently uses Azure infrastructure as a service (IaaS) but is moving to a PaaS to remove potential bottlenecks.
The growth of MarketInvoice, which was set up in 2011, reflects how technology companies in the financial services sector are a huge threat to the business of traditional banks.
The company buys invoices from businesses through funds provided by investors. These investors receive an agreed percentage of commission when the loan is made and then get the money back when it is repaid.
The government is an investor through the British Business Bank. The bank, which was established by the government, lends money to small and medium-sized enterprises (SMEs) through buying their invoices and makes money out of it through the commission. The Greater Manchester Authority also invests in it to provide much-needed credit to local SMEs.
MarketInvoice’s system carries out risk checks on a business with an invoice and then offers its creditors the chance to invest in the invoice based on the assessment. It can have funds from an invoice available to an SME within 24 hours.
On average, loans are repaid in 40 days and the company said only 1.9% of loans have been defaulted on to date. The average amount of the loans it transacts was £65,000.
More on technology in banking
This is an alternative to borrowing from a bank with interest rates. In October 2014, research from Infosys and French retail banking association EFMA revealed 45% of banks rated the threat from technology companies as high.
Moving to PaaS to remove inefficiency
MarketInvoice's existing IaaS enables the company to automatically access cloud computing resources when transaction volumes increase, but architectural bottlenecks in the company’s application could still slow things down. The move to the PaaS will remove this inefficiency.
Since its launch, MarketInvoice has enabled loans worth £323m to be made to small businesses. But the company is growing fast with £200m of the total being completed in the past year alone.
MarketInvoice CTO Matt Gatrell said if the firm continues to grow at this pace, it must move its application into the cloud. “Our biggest challenge is scale,” he said
Gatrell added that more staff are also required to aid the company's growth.
“We are on a big recruitment drive and we are looking for user experience specialists, developers and security analysts,” he said. “We are looking for top-end talent for these roles.”
According to Gatrell, it is difficult finding the right staff because of a skills shortage in the UK.
“We are not looking to outsource or use contractors," he said. "We want people to come to work and somehow be able to make a difference to the company.”
MarketInvoice has four potential futures. It could have an initial public offering, be acquired by a bank, get taken over by a big tech firm or grow organically.
There is fast growth across this sector. Peer-to-peer lending accounted for more than £1.2bn of UK loans in 2014, according to the Peer-to-Peer Finance Association (P2PFA).
The P2PFA said the sector in the UK has doubled in size since the end of 2013, with more than £2.1bn lent in total. The number of lenders has increased by a third and borrowers by 90%.
In December 2014, the initial share offering for US peer-to-peer lending firm Lending Club, which was launched in 2006, valued it at $9bn.