Heartland New Zealand will gain access to new borrowers through its investment in an online lending platform, says chief executive Jeff Greenslade.
The NZX-listed bank will buy about 10 per cent of HarMoney, which became New Zealand's first peer-to-peer lender to be licensed by the Financial Markets Authority in July and will officially launch tomorrow.
Greenslade would not disclose the bank's investment, but said HarMoney's technology was sophisticated and peer-to-peer lending was complimentary to its business.
"We don't see it as threatening or competition and we're very keen to support it," he said. "If you look overseas - in the UK and the US - it has certainly gained traction so we're confident there's a place for peer-to-peer lending in New Zealand."
HarMoney bills for the use of its website, which matches lenders and borrowers. Retail investors who lend money through the platform earn returns from the interest rates paid by borrowers.
In addition to its investment, Heartland will also provide a "funding line" through which it will use the platform to lend to HarMoney's borrowers.
"We see this as an opportunity to get to borrowers that we would like to lend to," Greenslade said.
HarMoney chief executive Neil Roberts said Heartland's investment was a powerful endorsement and the bank's funding line would boost the platform.
"Borrowers can be confident that we have funds to borrow and lenders can be comfortable that we've been endorsed by a bank," he said.
Roberts said that while the platform would be officially launched tomorrow, it had been running since last month and hundreds of retail investors were already on board.
"On both sides [borrowing and lending] we're seeing very strong demand," he said.
Roberts is HarMoney's largest shareholder, with a 70 per cent stake, Companies Office records show.
Peer-to-peer lending - as well as equity crowd funding, which enables the public to buy shares in companies through online providers - will be regulated by the FMA and has been made possible by new legislation that came into force in April.
Shares in Heartland New Zealand closed up 2c yesterday at 98c.