App-based bank Lunar has sold its peer-to-peer (P2P) lending business to Swedish fintech SaveLend to give the business the focus it requires.
Lunar said that with significant investment required in the peer-to-peer lending business, its customers would be better served by a specialist in this sector rather than a bank.
Lunar moved into P2P lending when it acquired fellow Swedish fintech Lendify in 2021.
Mats Bergius Persson, country manager Sweden at Lunar, said: “After careful evaluation, we see that significant investment in the P2P offering would be required to continue to provide the best user experience for our P2P customers and to scale the business. In SaveLend, we instead found the perfect partner as they only focus on developing the P2P portfolio for the benefit of the users.”
The acquisition will see around 17,000 lenders and 7,000 borrowers move to SaveLend.
SaveLend CEO Ludwig Pettersson said there are “significant revenue synergies in reinvesting and scaling up newly added investors’ savings capital going forward”, adding that the company’s proprietary technology helps it to “acquire customer stocks in this efficient way”.
Denmark-headquartered Lunar, which also operates in Sweden and Norway, was established in 2015. It offers a bank account via a mobile app, providing banking, payments and investment products for consumers and small businesses.
P2P lending is very specialist and Lunar is not the first digital bank to stop providing these services. In 2021, fintech pioneer Zopa ended its peer-to-peer lending business to focus on its banking service. The fintech pioneered the P2P model, having launched it in 2005.
At the time, Zopa said that its decision was related to increased regulatory costs. Zopa went on to focus on becoming a bank and became profitable in 21 months.
Fintechs are agile and regularly introduce new arms to their businesses. Zopa recently acquired fintech DivideBuy, in a move into buy now, pay later (BNPL) financial services. The acquisition followed Zopa’s announcement of a new round of funding worth £75m.
But the current global economic slowdown and the reduction in investment in fintech companies is also seeing businesses used to rapid growth cut back. Recent figures from UK trade body Innovate Finance revealed that global investment in fintechs had fallen 30% last year compared with 2021, with $92bn invested.
Other economic factors are forcing fintechs to reshape. In the P2P fintech space, for example, LendingClub, which was set up in the US in 2007, recently cut its workforce by 14% as high interest rates stifled demand for its lending services.