Top Marques Interview: Zagga CEO Marcus Morrison
Zagga, New Zealand's first peer to peer lender specialising in secured loans launched on December 1 2015. While only a 'soft launch', Zagga has already funded over $630,000.
According to chief executive Marcus Morrison a large number of enquiries have come from borrowers interested in its capacity to broker home loans.
Zagga is able to operate outside the loan-to-value restrictions that require banks to limit the amount of lending they do to borrowers with a deposit of less than 20 per cent.
Today we have a chat with Marcus about where he's come from, where he wants to go and what makes Zagga different to other peer to peer lenders.
Congrats on the new role Marcus, how would describe your leadership style?
I try and work to people’s strengths as much as possible, and seem to have done a good job of figuring out what those are for each of my team members. Having the team work as a collective with a single focus on what we are striving to achieve, but with a clear view on each person’s role, has served me extremely well to date.
Who is someone who has been a hero/mentor/role model and why?
I have been extremely fortunate to work for two leaders who were inspirational and trusting in equal measure. They both showed so much belief in me that I really worked hard to repay their faith and loyalty.
Then there are two other leaders who have always totally impressed me. Rob Fyfe, the ex CEO of Air New Zealand. In that role he was very visible, extremely accountable and seemed to really focus the organisation on the customer.
The other one may surprise you. Aung Sun Suu Kyi’s pure tenacity, and belief to overcome the odds for her party to win the recent elections in Myanmar. Over a long period of time she has displayed amazing courage and never wavered in her belief and commitment to democracy and the people of Myanmar. She clearly went through such dark times, but to come through that and to be able to deliver with complete poise and class in spite of it all is a genuine inspiration.
The common thing with all these leaders is an extremely strong sense of working to achieve something extraordinary as a team. Additionally, they are all very different and brought a massive amount of personal character to their roles, which reassures me that there is more than one way to stand out as an exceptional leader.
When looking back over your career, how has it prepared you for this role?
I have had an extraordinarily varied career as a consultant around the globe. For example, working in telecommunications in Bangladesh and Norway, and banking in Australia and Ireland. I have seen a huge number of things that have taught me ‘what not to do’ and I have seen a massive number that have inspired me and given me a broad range of skills. Everything I have done has centred on understanding customers, driving more efficient commercial processes and helping teams succeed. I hope these things, all of which will be thoroughly tested I’m sure, will serve me well at Zagga.
What is the underlying premise of peer to peer lending?
Peer to peer lending is fundamentally banking by the people for the people. It is all about enabling people who need money to borrow from those who have it, through a medium (online) that takes the emotion and stress out of the equation. It is about cutting out the middle man and applying transparency to one of the world’s oldest commercial transactions.
What makes you different to your competition, including the banks? – the sustainable point of difference that you can claim as your own.
Transparency, flexibility and speed. We can operate in a way that a traditional bank simply can't offer because of their size, makeup and traditional way of operating. As a result we offer great returns to lenders and more convenience, speed and transparency for borrowers. Lenders view the loans and choose the ones they want to fund based on the return they want and the level of risk they are comfortable with.
When we look at New Zealand’s other peer to peer lenders, we are the first company specialising in secured lending (typically against a 1st mortgage). This means we can provide amazing peace of mind for investors and enable borrowers to borrow up to $2 million.
Zagga is not only a startup, it is also entering a very immature market; what challenges does this bring?
The main challenge is to ensure that the market understands what we are doing and why, and that we not only make our processes robust, but easy to follow. We need to make the complex simple, and deliver genuine customer service. We have views on how we should do this, but the best way to learn is for us to listen to our customers and our competitor’s customers and implement any improvements quickly and without disruption.
Many people have had a rough time with lending institutions in the past, how will you address this?
Trust is a massive issue. Our response is pretty simple - it's all about providing transparency. The great thing about peer to peer lending is that we (Zagga) don’t touch anyone’s money. Borrowers apply for a loan through our platform, we assess the risks and once the loan is approved and published online, lenders decide from one or many loans, where they want to invest their money - this is called fractionalisation or in simple terms, spreading the risk.
Because Zagga specialises in secured lending, lenders can invest in other kiwis safe in the knowledge that there is security behind the loan. In addition, our platform will manage the loan for lenders so that they don’t have to worry about collecting repayments, checking insurances, etc. All of this will make lending a financially rewarding exercise, without the risk they may have been exposed to elsewhere.
What role will the brand play?
Brand is critical. I’ll explain by posing some rhetorical questions. What does the brand say about who we are and how we operate? What emotion does it conjure up? We’re pretty certain that people will see Zagga as new, fresh, approachable and trustworthy. But we need to deliver and create an experience that is totally in sync with what we saying, so the market builds positive associations and learns to trust the brand. That’s when we’ll lead, become top of mind and the ‘first choice’ for lenders and borrowers.
Where do you see the business in five years?
I expect we will have doubled in size a couple of times over the next five years. I want us to be the most trusted peer to peer lender in NZ. I expect we will have had borrowers and lenders coming back and borrowing/investing with us repeatedly. I want to create something that has a genuine impact on the market and has all of the qualities required to be a genuinely enduring business that makes a positive difference to New Zealand and New Zealanders.
What is it about timing that led you to launch Zagga now?
The legislative changes a couple of years ago opened the door and made peer to peer possible in NZ. Then we had to decide how we would like to operate in this space, as we didn’t want to simply copy what other peer to peer lenders had done overseas in the US, UK and China.
It was important that we created something that was extremely robust; something we could stand behind. On that basis, we made the decision to specialise in secured lending. From there, it was about designing the business, obtaining the FMA licence, creating the brand and then building the technology and back-office processes. This has all taken a significant amount of time. We didn't want to rush it and we now feel we’re in a position to do the business and our customers' justice.
What role will social media play in promoting Zagga?
One of the joys of the current business environment is that through social media, the consumer has a much stronger voice than ever before. Customers now talk to each other, and to businesses, about their wants, needs and experiences and all with a few quick taps on their keyboard or mobile device. With that as context, the onus is on us to listen and participate in these conversations and never be afraid.
This close interaction with potential and current customers will provide us with an opportunity to ride alongside them and learn what changes and enhancements we should be making to our platform and service offering. The other role that I see social media playing, is around our need to educate our market about what we are offering (and how it benefits them), how we deliver, and how what we are doing is different to others. Listen, learn, reply and apply.
Zagga first week is almost done. Can you share with us a 'yes, this is why we're in business!' moment?
Haha sure thing! Yesterday, we refinanced a loan for a couple who were turned down by the bank because they had a dispute on their credit record for a $400 bill. This meant they had to secure a loan through a lender of last resort and were paying a huge interest rate and six-monthly rollover fees.
This couple have plenty of capital in their properties, therefore great security. We approved them that day with a much lower interest rate and a 7.74% return for the lender. Now that's 'kiwis funding kiwis' at its best!
Thanks for your time Marcus :-)
To learn more about Zagga and their types of loans follow this link: Zagga loans.