P2P lending giant Prosper acquires Israel’s BillGuard

P2P lending giant Prosper acquires Israel’s BillGuard

Crowdsourced financial safety data meets peer-to-peer lending in a new deal involving one of Israel’s top fintech firms

BillGuard screenshot (Courtesy)
BillGuard screenshot (Courtesy)

Israeli start-up BillGuard, which provides a crowd-driven platform to help consumers protect their money, is being acquired by Prosper Marketplace, one of the world’s biggest peer-to-peer lending marketplaced, for a reported approximate $50 million.

The deal, announced Thursday, will integrate BillGuard’s financial protection technology into apps and services provided by Prosper, said BillGuard CTO and co-founder Raphael Ouzan. “This is the first time P2P lending is moving to personal management, enabling customers to keep track of their financial well-being. We’re proud to be part of the revolution Prosper is responsible for, and we intend to keep developing BillGuard from within their platform.”

The deal creates a marriage between two firms that have been pioneers in their respective fields. BillGuard was the first service that enabled users to keep track of their financial transactions and alert them to possible fraud events across financial institutions and systems, while Prosper, with $4 billion in loans over the past four years, is the biggest platform in the US that connects individual lenders with borrowers.

“Both BillGuard and Prosper Marketplace are focused on empowering consumers to be financially secure, smart and successful,” said Yaron Samid, co-founder and CEO of BillGuard. “Joining forces means that BillGuard can continue to innovate while contributing to the evolution of Prosper Marketplace as a full-service financial management company.”

BillGuard keeps track of users’ financial transactions based on accounts that are registered with the app (a user can include credit cards, utilities, or any other account that uses electronic payments). At the end of the billing cycle, users get a list of transactions they are being charged for. If something doesn’t look right, a user can flag a transaction, and an alert will be sent out to the bank or credit card company. That information is crowdsourced using a unique algorithm that pools together all the problematic charges and checks them out – and if it sees a trend, sends out notices to all BillGuard users to watch out for fraud, and tracks down and alerts the company responsible for the problem.

While banks already do this for their customers, they only perform checks on their own financial instruments (such as credit cards they issue), and only alert customers if their algorithms find a problem, without providing full information on all transactions. BillGuard is the only app to do this from the point of view of the consumer, said Ouzan.

The BillGuard technology will fit right in at Prosper, where it will “become a comprehensive financial wellbeing app, offering greater transparency and intelligent recommendations that empower consumers to make smarter financial decisions,” Ouzan added.

Using its crowdsourcing capabilities, BillGuard can gather, collate, and analyze data about lenders, borrowers, and anyone else that does business on the Prosper platform. As a P2P system, Prosper’s highest priority is keeping its system “clean,” ensuring that participants in the system are who they say they are, and are able to loan and repay as expected.

Both sides are, of course, vetted by Prosper already, but BillGuard will enable users to feel safer with their transactions – as well as enable Prosper to expand its service offerings, by providing BillGuard’s financial transaction capabilities to enable Prosper members to better keep control of their finances.

“Until now, nobody has brought together marketplace lending and personal finance management to deliver an offering that truly empowers, protects and educates consumers,” said Aaron Vermut, chief executive officer at Prosper Marketplace. “This will be a transformative acquisition for Prosper Marketplace and for the marketplace lending industry.”

Tel Aviv-based BillGuard, according to company figures, has flagged over $70 million in unauthorized charges. With more than 1.3 million registered users, BillGuard’s five-star rated iPhone and Android mobile apps have won almost every industry award in their category, including being named one of the top banking innovations of all time by Online Banking Report and a Best App of 2014 by Google.

San Francisco-based Prosper, meanwhile, has connected hundreds of thousands of qualified borrowers with loans for everything from medical procedures like fertility treatments to home improvements and debt consolidation. The company has experienced extraordinary growth over the past three years, originating $1.6 billion in loans through the Prosper platform in 2014 – a 350% increase from 2013 – and it expects to more than double that in 2015. To date, nearly $5 billion in loans have been transacted through the Prosper platform.

Prosper Marketplace was recently named to Inc. magazine’s 2015 Inc. 500 ​, a list of the fastest growing private companies in America. The company was also named one of America’s “Most Promising Companies of 2015” by Forbes magazine ​and is on Finovate’s Fintech Unicorn List.

“Both BillGuard and Prosper Marketplace are focused on empowering consumers to be financially secure, smart and successful,” said Samid. “Joining forces means that BillGuard can continue to innovate while contributing to the evolution of Prosper Marketplace as a full-service financial management company.”

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