ArchOver’s managing director Charlotte Marsh tells Marc Shoffman how the platform has become one of the most established players in the market while staying loyal to its retail investors
ArchOver may not be the largest of the peer-to-peer lending platforms but it is one of the most established and experienced, having stuck to its retail roots since its launch in 2014.
The P2P business lender has built up a loanbook of more than £150m and despite just 14 full-time staff, has become a major player in the sector.
Its former head of credit Charlotte Marsh took over as managing director of ArchOver in 2020 after founder Angus Dent stepped back from the chief executive role.
Marsh comes from a retail background, having held senior accountancy roles at Giorgio Armani and Harrods.
She explains how she has used her experience to steer ArchOver through the pandemic and beyond.
Marc Shoffman (MS): How has your experience with Harrods and Giorgio Armani helped with running ArchOver?
Charlotte Marsh (CM): A large part of my retail experience, even though it was in head of finance roles, has been in e-commerce.
There are similarities between P2P and online retail. You never see the audience and you don’t have footfall through a shop.
You are always online and present and there is an expectation from customers that they can always contact you.
You have sight of your audience at all times – that transfer of experience was key at the early stage to look at the data and see the profile of borrowers and investors, the type of loans they like and their risk profiles.
MS: How has ArchOver changed since its launch in 2014?
CM: ArchOver hasn’t really changed since the early days. We are hands on with lenders and borrowers, and each deal still passes everyone’s desk.
Our technology is developing constantly like every other platform but we still like the human touch, you can get a better sense of your borrowers by picking up the phone.
That means speaking with business owners to see their plans as it helps you get a better insight of who you are dealing with.
That face-to-face interaction kept going during the pandemic and we had technology to support us during lockdown scenarios.
It’s very much a mixed pool of lenders with different appetites and we always manage borrowers for the appetite of the time.
That hasn’t really changed, we have just managed a different amount in that pool and kept the same momentum going.
MS: Where do you see yourself in P2P lending market now that some large players have left?
CM: We never measure ourselves by the bigger players. It does provide more opportunities to fund borrowers though.
There may be different risk appetites and it will depend on the rates on offer for an investor and borrower at the time.
The terms of the loan are also important. We ask for a first charge, which may deter borrowers. Others ask for a personal guarantee.
MS: How has ArchOver managed to maintain its retail P2P lending roots?
CM: It boils down to the expectation of what you are trying to achieve with your business. We have set out to bring quality borrowers to our lenders that are sophisticated with their portfolio. We met that expectation early on and have managed to keep the momentum going.
Our services have developed but our approach is the same. We focused on account receivables and credit assured lending a few years ago. We still manage that but the market has moved away due to the government-backed loans.
Cashflow lending and management buyouts are now the focus instead.
We have developed our services over the years but our expectation and approach has stayed the same. I think others may have changed in ways that haven’t suited the market.
Our parent company, Hampden Holdings, also give us massive support. We feel like we are part of a bigger group.
We have met the expectations of what they want to achieve without pushing the boundaries too far.
MS: How has ArchOver coped during the pandemic?
CM: We talk to all our borrowers on a monthly basis regardless of the pandemic. Being head of credit for some years I know a large proportion of our borrowers.
Our team kept in contact with them from the start to discuss what plans businesses had to put in place. Some of our borrowers took out government-backed loans as top-ups to help them during the crisis.
Following our initial pause on the platform, our lenders were incredible, they continued to lend, there was no hesitancy.
Some other platforms froze the ability to take money in and there was probably a bit of an uplift for us as we were open and available, plus we have a small team so didn’t need to adjust too much.
Everybody stayed at home working, we had no need for furlough, everyone was kept busy.
Many of our staff have been with us since the early days, they know the sector inside out.
One tool we use is AccountScore. It uses open banking to keep an eye on a business and their finances.
Other than the borrower reporting to us monthly, we do not bother them too much but we can see how they are doing. You need real-time information for lending.
Open banking is not a requirement for businesses now but it will probably become one over the next few years. It is a good way of spotting issues, maybe even before a business does.
MS: What was the impact of the pandemic on your investors?
CM: All of our loans are in for a term, so lenders can’t remove funds. We don’t have a secondary market so we just reminded lenders of the terms and conditions and they understood.
Lenders were sent regular updates to let them know how we were dealing with borrowers and to provide some reassurance.
MS: Did ArchOver apply to take part in the government’s Covid loan schemes?
CM: We looked into it but then the tick boxes were to have institutional funding and that didn’t meet the criteria as we are purely retail P2P.
There were a lot of unknowns at the time. Everyone was putting in applications but it was a step aside from our strategy.
It is hard to answer if we would have done it if retail funding were allowed.
There are now predictions of rising defaults from the state-backed loan schemes, meaning lenders would stand to lose some of their money if we’d participated.
That doesn’t fit our service that we have spent a long time building.
MS: Are you concerned about new rules on appropriateness tests and marketing restrictions?
CM: ArchOver has always been regulated and always adhered to regulation. Compliance signs off all marketing regardless of whether its retail or business promotions. I believe all investors pass our appropriateness tests first time and are regularly retested.
MS: What is ArchOver’s outlook for 2022?
CM: It would be good to get the team back together in the office. We have missed the team bonding. I don’t know if we will go back to five days yet, it would be good to give some balance to the team.
Largely, we are looking for more quality borrowers to meet our lenders’ expectations and our demands. It would be great to get out and see new and current borrowers face-to-face for the first time in a while as well.
Joining the 36H Group is something that is definitely on the agenda. We tried to meet them in 2020 but then the pandemic happened.
Other projects include measuring environmental, social and governance factors on borrowers but we just need to find the right partner for that.