The table lists the loan originations of p2p lending marketplaces in May. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 500 million Euro. This is over 10% higher than the previous month and that despite the adverse effect of the pound taking a dive. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Paskoluklubas.
Milestones reached this month are:
Assetz Capital crosses 250 million GBP lent sinch launch
Lendinvest reaches 1 billion GBP in origination since launch
Table: P2P Lending Volumes in May 2017. Source: own research
Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
NEO Finance is the leading P2P lending platform „Paskolų klubas“ in Lithuania. The platform is an intermediary for consumer loans connecting lenders directly with borrowers. We believe that fintech company should be not only innovative, but also professional. This is why we gathered a strong team of senior experts from the banking sector with the expertise in consumer lending, bank management and risk control. Currently all of “NEO Finance†activities are supervised by the Bank of Lithuania due to obtained e-money license, P2P license and as a consumer lender status, to ensure that responsible lending criteria is enforced.
We have a unique platform that we developed our self to fit the needs of our investors. NEO Finance offers buyback and provision fund services, which minimizes risk for lenders. Moreover, partnership with Legal Balance, UAB enables platform’s users to experience the benefits of 7+ years of delinquent loans recovery know-how.
By transferring money to “Paskolu klubas†account investors deposit it into e-money IBAN account under their own name and hold all of the money under their control till the investment is made.
Our main goal is to ensure a sufficient supply of loans are listed in the primary market, so that our investors can cherry-pick the loans adequate to their investment strategy.
What are the three main advantages for investors?
Provision fund service. By voluntarily paying a provision fund fee, more conservative investors can be secured from delinquent or defaulted loans. If a borrower is late with the installment, provision fund immediately covers that installment. The fund holds largest amount of proceeds to cover late payments in the Baltics and holds more than 100 000 EUR at the moment.
Buybacks. Investors, who did not choose the provision fund service, can sell defaulted investments to “Paskolu klubas†for 50-80% of its face value. Instead of waiting for a relatively long recovery process they can reinvest their money into other loans.
Higher interests rates of return. In Lithuania, we operate in market of higher interest rate. Currently our average interest rates are as fallowed for each of the credit rating: A – 13 % B – 17% C – 20%. This creates opportunity for investors from all over the Europe to receive higher returns.
What are the three main advantages for borrowers?
Lower fees for borrowers. As our fees are one of the lowest for borrowers, therefore half of the borrowers choose “Paskolu klubas†loan as an alternative for a bank loan.
Possibility to get an instant loan. Since we developed in-house state-of-the-art IT platform ourselves we can offer unique features for borrowers and investors. One of them is instant loan service. Investors can set up their automatic investment tool and borrowers can see what amount they can borrow at what rates, as the system collects all automatic investment orders starting with the lowest rate and building it up to meet the needs of a borrower. This feature enables investors to invest their capital faster.
No upfront fees. Unlike other platforms Paskolu klubas does not charge upfront fee from borrowers. Borrowers do receive the exact amount they borrow. Platform fee is deducted from the payments, this way we take the risk together with investors and are able to offer barrows flexible barrowing.
What ROI can investors expect?
10-18% after taxes. One investor did an experiment with 4000 EUR initial deposit. Half of the investments were made using a provision fund service, 5 defaulted investments were sold to NEO Finance and some investments were sold in the secondary market with premium. ROI after exactly 1 year was 14% after taxes.
Is the technical platform self-developed?
Yes, this allows us to add various new features and to fit the needs of both – investors and borrowers. We are not only the peer to peer platform, but also a fully licensed e-money institution. This enables us to operate as an online bank with IBAN account numbers and SEPA MMS payments.
How is the company financed? Is it profitable?
The company is financed from shareholder’s equity. It is not profitable yet, but we are in operation for only one and a half year. Our current goal is market penetration and market share.
What were/are the main challenges in the Lithuanian market?
When preparing for the launch, we spent a lot of time carefully analyzing Lithuanian and foreign markets. “Paskolu klubas†shareholders and employees have a lot of experience in the financial sector, we also cooperate with the best partners and agencies. This helped us to be prepared, therefore none of the challenges were unexpected.
One of the more significant challenge was financial literacy. Potential investors were not introduced to peer to peer lending before. Therefore, we started an event and training cycle where we educate investors about pros and cons of peer to peer lending.
You launched the company for residents of Lithuania quite some time ago. What prompted you to open up for international investors and launch an English version of the website right now?
From our experience, we knew that establishing consumer loan brand in a market takes at least a year. We focused our effort on becoming the number one platform in Lithuania for the past 18 months, but had strategic plans to open our platform to international investors from the beginning. Currently we can supply enough of quality loans for international investors.
Another reason was it took time to acquire full e-money license. For this we had to make sure we meet international anti-money laundering requirements and international identification requirements. Only after establishing processes, developing the system and meeting those international requirements we are ready to offer opportunity for international investors.
Which marketing channels do you use to attract investors and borrowers?
For investors, we mostly use educational channels where we try not only to advertise, but also to educate people about investment opportunities. In 2016 we organized over 30 events for our investors. We also use partnership of different financing experts who can provide feedback on our platform and receive bonuses for the investors they bring in.
Moreover, word of mouth perfectly works for us, because we have many satisfied investors, who are sharing their experiences and helping us grow.
For the borrowers, we have fully integrated marketing campaign. We use all traditional and digital channels. We invest in brand building and acquiring quality borrowers. This helps us to acquire valuable borrowers, who are worth to invest in.
Where do you see Paskoluklubas in 3 years?
We see Paskolu klubas as a global player in P2P lending sector. We may establish borrowing sites in other countries, but we will localize it as we did with Paskolu klubas in Lithuania. We see advantages of strong brand in each country we operate for borrowers. We are currently on a path of fast growth and we are not looking to slow it down. Our goal for next few years is to be the number one platform for investors in the Baltic states.
Investors can use the Paskoluklubas referral code P2PBANKING when registering and get 10 Euro for their first investments.
DoFinance is a P2P platform for private individuals to invest in consumer loans.
We believe in finance for human –  DoFinance aims to become the most user-friendly, secure and accessible P2P lending marketplace possible, so that anyone can participate in seemingly complex processes and become his or her own financial director.
What are the three main advantages for investors?
Potential investment risks for investors are well-balanced and brought to minimum: all loans are secured with a BuyBack guarantee. If the borrower doesn’t pay back the loan, you don’t have to wait for an extra 30 days (after the investment due date) to get your funds back – your money is available right away;
You have access to your money at any time – if you decide to withdraw invested money before the due date, you can receive your money starting from 14 to 28 days after your request with (or without) accumulated interest, depending on your chosen investment plan and preferred withdrawal term;
Your money never sits still; it is always earning. Auto Invest program on DoFinance reinvests funds the moment the borrower returns the loan and the investor’s money becomes available.
What ROI can investors expect?
Depending on the chosen investment plan, investors earn up to 12% annual return.
DoFinance was founded by the Alfa Finance Group. Can you please describe what Alfa Finance Group does and why it decided to set up the DoFinance marketplace?
The Alfa Finance Group is an online lending and investment management company operating with consumer loans in Poland, Georgia and Indonesia. We are proud that in less than two years – since its launch in 2015 –  the Alfa Finance Group has attracted more than 150,000 registered clients and over €16 million in loans issued as financing loans.
Launching [the] P2P platform is just one of the steps toward expanding the list of available financial services of Alfa Finance Group. Our goal is to continue developing and offer more financial services in the investment management sector.
According to the press release Alfa Finance Group has invested 2 million Euro in launching DoFinance. Can you please describe what the money was used for?
The money was invested in technologies to create the platform and in building our loan portfolio.
The best warranty for the safety of investors’ funds, we believe, is effective risk management when it comes to the borrowers thereof big part of the money was invested in developing risk assessment tools that allow us to evaluate borrower’s behavior to detect their willingness to repay as precisely as possible. Our risk assessment tools as well as expertise in risk management permits us to evaluate the behavior of each potential borrower, hence minimizing the risk of failure to repay the loan and making the investment process as safe as possible.
Is the technical platform self-developed?
Yes. The technical platform is built on two pillars – creating a more secure and user-friendly P2P lending platform. During the development stage, we focused on smart risk assessment and platform that is handy, accessible and easy to use. We consider customer feedback carefully and, although a lot has been done already, we are still at the very beginning of our journey – the next challenge is to work on the planned improvements.
What was the greatest challenge so far in the course of launching DoFinance?
Obviously, the fierce competition in the industry challenges us to work faster and bring innovations to the marketplace, but it would be just fair to call it motivation and not challenge.
DoFinance is a marketplace, and it is vital for us to make sure the products we offer are entirely safe.
The greatest challenge was to develop a risk assessment tool that would minimize the risk of failure to repay the loan, be effective and secure. Risk assessment and management is our strength, and all our loans are secured with a BuyBack guarantee. If the borrower doesn’t pay back the loan, you don’t have to wait for an extra 30 days (after the investment due date) to get your funds back – your money is available right away.
Another challenge was becoming available also to Asian investors. DoFinance is the first European-based P2P lending platform to open customer center in Indonesia, bringing together European customer centered approach and Asian investors. We are happy to be the first ones to offer such individual approach to all our customers and give the chance to Asian investors to invest in Europe.
Which marketing channels do you use to attract investors?
Technology innovations are at the heart of our products hence we mainly use the opportunities digital marketing channels offer. It is a great channel to also reach important players in the industry – opinion leaders, investors, experts etc.
Finance for human stands behind everything we do, which means we look for creative ways to reach our audiences – not only fintech professionals, but also investors without a professional background in financial and investment management. Anybody who is at least 18 years old and holds a bank account can register at DoFinance and, by investing as little as 10 EUR per loan, become his own financial director.
Is DoFinance open to international investors?
Yes, DoFinance is available to private individuals holding a bank account in EU, EEA countries as well as Asian countries which are not included in the lists of high-risk and non-cooperative jurisdictions and international sanctions (Indonesia, Singapore, Vietnam etc.).
What is your opinion on the planned upcoming regulation in Latvia for p2p lending?
It is important that the Ministry of Finance includes industry representatives, when developing regulations on p2p lending platforms. Regulations developed without a throughout understanding of the industry can harm both investors and businesses.
Fintech industry has a potential to become Latvia’s success story which would contribute to both image and prosperity of the country, thus there must be healthy balance between industry regulation and its self-regulation. The entire financial industry and eventually the consumer will benefit from the development of FinTech as banks and FinTech companies will start cooperating when it comes down to providing financial services, customer service etc. Therefore, it is the state’s responsibility to create environment where these companies will stand and where intellectual capacity of labor will increase and taxes will be paid. At the same time, the regulation must ensure transparency and monitoring – simply because then dishonest entrepreneurs wouldn’t be able to harm investors.
Where do you see DoFinance in 3 years?
DoFinance will definitely expand geographically and continue working on developing new financial products for international markets. Our services just became available to Asian investors and now DoFinance looks even further – we don’t want to limit ourselves when it comes to geographical borders.
As we already mentioned, DoFinance is just the first step toward expanding the list of available financial services of the Alfa Finance Group. Most importantly, with every new development we make sure to keep our core principle – finance for human.
P2P-Banking.com thanks Janis Kulikovoskis and Viesturs Kulikovoskis for the interview.
The table lists the loan originations of p2p lending platforms in April. Funding Circle leads ahead of Zopa and Lendinvest. The total volume for the reported marketplaces adds up to 445 million Euro. I track the development of p2p lending volumes for many countries. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Nucleus.
Milestones reached this month are:
Younited Credit crossed 500 million Euro loan volume since launch
Table: P2P Lending Volumes in April 2017. Source: own research
Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
A year has passed since I last wrote about the portfolio I built on Finbee. For a detailed description of this Lithuanian p2p lending marketplace see my earlier review. As described there, I invested mostly in the highest risk grade loans (‘D’ loans). Currently I have invested 1,027 Euro in 35 loans. 32 are current (965 Euro), 2 are late (23 Euro) and one is in default (38 Euro), but rates for this loan are paid to me by Finbee’s compensation fund. The average interest rate of my loan parts is 31%. Interim I had grown my portfolio to up to 3,000 Euro invested, but interest rates have decreased due to high investor demand that was not met by comparable growth on the borrower side, so I have withdrawn 2,604 Euro meanwhile.
My results so far
My self calculated yield (XIRR) is 31.5%. This is the highest I achieved on any p2p lending marketplace over a longer duration of time. This includes the 110 Euro capital gain caused by sales of loans on the secondary market with premiums (see my article on trading on Finbee’s secondary market). Calculating the result again, this time with assuming a full write-off of the defaulted loan gives a yield of 29.4%.
Screenshot of my Finbee dashboard – click to enlarge
There are 19,930 Euro (as of March 13th) in the Finbee Compensation Fund. Current estimate is that the fund is paying about 9,000 Euro per month on defaulted loans and has decreased about 2,000 Euro from February to March. To grow the amount in the Compensation Fund Finbee will need to increase the volume of new loan originations. I looked into the list of open loan requests this morning and there are currently only 3 consumer loans and 2 business loans open for funding.
The table lists the loan originations of p2p lending marketplaces in March. Volumes picked up considerably compared to February. Funding Circle continues to lead ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 532 million Euro. I track the development of p2p lending volumes for many countries. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Lenndy and Credit.fr.
Milestones reached this month are:
Mintos crossed 150 million EUR in originations since launch
Table: P2P Lending Volumes in March 2017. Source: own research
Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
