Landbay Uses AWS to Bring Tax-Free Interest to Investors

Using AWS, Landbay has become one of the first peer-to-peer lenders in the United Kingdom to be granted full authorization for a new type of tax-free individual savings account (ISA). The company specializes in peer-to-peer lending for the buy-to-let housing market. It hosts its platform on a microservices architecture based on AWS services including Amazon EC2 Container Service (Amazon ECS) Amazon Relational Database Service (Amazon RDS).

A £483 Billion Opportunity

Over the past 10 years, the peer-to-peer (P2P) lending market has gone from strength to strength, growing by 39 percent in the United Kingdom from 2015 to 2016. Dozens of platforms and companies now compete to connect individuals who want to borrow or lend money. These platforms give borrowers a source of funds where traditional banks might be reluctant to lend, and they provide investors with potentially greater returns than are typical with mainstream financial instruments.

To foster further growth in the sector, the UK government introduced a new individual savings account (ISA) in 2016—the Innovative Finance ISA (IFISA)—an account that allows investors using P2P lending platforms to receive tax-free interest. IFISAs represent great value for investors, typically yielding 3.5 percent interest per year compared to 0.5 percent in a regular cash ISA. The market for the IFISA to crack is vast: in the tax year 2014–2015, adult ISA holdings totaled £483 billion.

But in order to offer an ISA, an institution must gain approval from the Financial Conduct Authority (FCA). Once the IFISA was announced, the race was on for companies—like P2P lender Landbay—to become authorized in time for the new fiscal year.

Supporting 1,000 Percent Annual Growth

Landbay specializes in P2P lending for the buy-to-let housing market. The company connects investors with professional buy-to-let landlords, providing a competitive loan to the landlord in return for attractive and predictable returns for the investor. By cutting out the banks, both the investor and the landlord get a better deal.

It was launched in 2014, and quickly grew to serve thousands of investors, funding more than £60 million worth of property. Julian Cork, chief operating officer of Landbay, explains how the company’s agile approach extends to its technology: “Our plan was to work with a third party at the start to quickly develop a minimum viable product for our P2P-lending platform. Once we’d learned a few lessons about what features users want, how to scale it effectively, and what kind of underlying architecture we needed, we would build it on technology that was fully under our control, and we chose Amazon Web Services.”

Landbay migrated all its systems to Amazon Web Services (AWS) in October 2015, because it recognized the need to prepare for scale. And scale it did. Landbay completed its 100th mortgage in December 2015 and by March 2016 had already doubled lending, with an annual growth rate of more than 1,000 percent.

Cork explains the choice to go with AWS: “I’d spent 20 years in two large investment banks, where I had overseen due diligence on cloud platforms. I knew AWS would be the best choice for the business because of its flexibility, scalability, and wide range of features.”

As a startup company, Landbay benefited from the AWS Activate program, which provides startups with low-cost, easy-to-use resources to get started on AWS. “Our AWS account manager helped us join the Activate program,” says Cork. “It allowed us to stay cost-efficient, and AWS was instrumental in enabling us to optimize cost following our migration to a new platform in October.” As an example, Landbay is already saving 80 percent on the cost of some of its virtual servers by using Amazon EC2 Spot instances.

“We’ve also benefited massively from AWS Business Support,” adds Chris Burrell, lead software engineer at Landbay. “For example, we had a few live issues on the day of migration that were resolved very quickly—within 30 minutes.”

Stamp of Approval from the FCA

Flexibility helped Landbay become one of the first P2P lenders to be fully authorized by the FCA in December 2016. “As a business, we must be able to move quickly,” Cork says. “Part of the reason that we were one of the first to market with our ISA was that we could implement changes fast once we got permission, and this meant that our customers were able to make the most of both last tax year and the current one.”

Cork notes that AWS played a crucial role. “Fortunately for us, Amazon Web Services was able to deal in an open and cooperative way with the FCA,” he says. “AWS provides the infrastructure that enables compliance and security within the cloud, and we are kept informed of any planned technical issues and maintenance operations. Without the support of AWS, Landbay would not have been able to become fully authorized as quickly as we did.”

Technology Behind a P2P Platform

Burrell explains why Landbay decided to build its platform using microservices. “In a dynamic sector like ours, we can’t be bound by long delivery processes. We invested a lot in automation, which is only possible in the cloud. It takes us about six to eight minutes to deploy code from a commit to going live, and we can bring up a new microservice from scratch in 20 minutes.” This, he says, is in comparison to deployments that used to take days—if not weeks—on physical hardware.

Burrell points to AWS products like Amazon EC2 Container Service (Amazon ECS) and Amazon Relational Database Service (Amazon RDS), which have enabled Landbay to achieve what it has in its short existence. “We’ve built our automation pipeline around Amazon ECS,” he says.

“Using it allows us to focus on code rather than infrastructure, and get those changes out quickly.” Amazon RDS is fully managed by AWS, meaning Landbay can rely on AWS to upgrade or back up its databases.
“Using Amazon RDS means FCA authorization was so much easier than in a collocation center, where we manage the software but someone else owns the servers. That situation can become quite messy,” says Burrell.

The engineer has also noticed improved uptime with AWS. “We have 99.89 percent availability, which is vital for our user experience,” says Burrell.

By using AWS, Landbay can also handle step changes in traffic from new business ventures. For example, in early 2016, the company received equity investment from property company Zoopla, which resulted in the launch of Zoopla Invest. This has been gradually rolled out to all Zoopla site visitors since October 2016. “Our site traffic and investor registrations are rising to record highs,” says Burrell. “Zoopla has approximately 8.7 million visitors a month, and with volumes like this feeding through to our site, Landbay needs to rely on the scalability provided by AWS.”

Cork sums up the uniqueness of what Landbay has achieved using AWS. “We are the only property-backed peer-to-peer platform to offer this tax-free savings account,” he says. “In fact, when we launched our ISA only two of the nine members of the Peer-to-Peer Finance Association had authorization at all.” With its agile, scalable, compliant, and available infrastructure, John Goodall, chief executive of Landbay, paints a positive future for the company and the industry: “When the chancellor first announced that the IFISA would launch in April 2016, it was hailed as a victory for savers and investors alike. Using AWS, we’re proud to be one of the first platforms to offer investors the benefits of the new Innovative Finance ISA.”