At an informal meeting of 21 government pensions funds in Geneva, Switzerland, the topic of alternative lending was for the first time on the agenda. The funds discussed the risks and merits of allocating a small percentage of their investments in this asset class in the future. P2P-Banking learned that the managers of the Statens pensjonsfond Utland, the Norwegian Government Pension Fund, are considering to propose to call for an adaption of their investment rules to allow the investment of up to 0.3% of the funds money in innovative finance. A representative of the Australian Future Fund said, that investing to p2p lending marketplaces might be an interesting strategy in order to reduce the systemic risks that banks pose. However it would be much to all early to take this step now.
Unconfirmed rumours say that even the very conservative management of the German Rentenversicherung is analysing the opportunity due to very low yield of other asset classes. A spokesman of a German opposition party stated ‘This is all fake news. There is no way that pension money will be put in this unstable investment. We will not allow it’.
It would not be possible at the current size of the industry to allocate even a tiny fraction of the funds of these sovereign wealth funds, due to their sheer size.
Demonstrants from the Swiss communist party were protesting loudly outside the conference hotel, claiming this is just a plot of banks to divert attention from their wrongdoings and scams.
What was formerly Saving Stream is now called Lendy. The operator of the marketplace has been Lendy Ltd. already, it was just trading as Saving Stream for investors. Now under the new domain Lendy.co.uk the company has brought together its services for investors and borrowers citing feedback by users. There is some speculation that rebranding could have been necessary as a prerequisite to full FCA authorisation as the FCA may have objections to the “Savings” in the old name.
The announcement email sent, reads:
Simplifying Saving Stream – The Lendy rebrand
Following feedback from users, we are integrating the Saving Stream platform under the Lendy brand. This is in order to simplify the brand and make accessing the crowdfunding platform easier for all our clients.
As part of the rebrand, investors and borrowers will now use the same website:
www.lendy.co.uk Features on the refreshed site include a new Help Centre, with an extensive FAQ section and glossary. We’ve also added all of our recent news into a new Customer News section. The rebrand has been guided by platform users who were very positive about the Lendy brand. We hope you like it. The Saving Stream website will be redirected to the new Lendy website in due course.
While the new brandname is short and fitting, I note that it is somewhat close to other offers in the p2p lending space e.g. Lendix or Lendit. There even is a p2p lending marketplace in Lithuania named Lenndy (double ‘n’).
P2P lending marketplace Relendex, which does commercial real estate lending directly connecting creditworthy borrowers to investors, has full authorisation from the Financial Conduct Authority (FCA). The regulation will allow Relendex to launch its new Innovative Finance ISA giving retail investors tax efficient lending to the U.K. commercial property market. Founder and Chief Executive Officer of Relendex Michael Lynn, said:
“FCA full authorisation marks a fantastic start to 2017 for the Relendex team and platform which will further encourage and facilitate investment in commercial property from both our UK and foreign investors. The appetite for P2P marketplace lending in the property sector continues to grow at an incredible rate with the advances in technology resulting in further market share being taken from the high street banks. Receiving full authorisation will further accelerate this growth and demonstrates that Relendex’s robust operational infrastructure has met with the highest standards demanded by the FCA, bringing increased transparency and confidence to our customers. Relendex, an early mover in security-backed commercial property lending for investors, specialises in innovative finance through its nimble P2P marketplace lending platform technology and ultimately improves accessibility of established and secure asset classes into the direct retail and institutional investor market. The … approach and automated secondary market provides much needed liquidity to lenders.â€
Relendex says it has sustained zero defaults on its loan book to date.
Obtaining ISA manager status on the back of this full FCA approval is the next step for Relendex allowing them to be one of the first movers in offering the Innovative Finance ISA to retail investors – the tax free wrapper and P2P investments that is forecast to propel the industry into the mainstream.
Moneything announced today that have been fully authorised by the Financial Conduct Authority (FCA).
Moneything see this as a significant milestone for our business and the result of just over 18 months’ work that involved the scrutiny of every aspect of our business.
In the announcement Moneything says
Many platforms in the P2P industry are working hard to gain their full permissions and we are one of the first few platforms to be granted full authorisation, ahead of some of the largest P2P companies.
This will help to give our lenders and borrowers confidence that we meet high standards in the way we operate, based on the regulations set by the FCA.
We have had some extraordinary assistance along this journey from our compliance consultants and our legal advisors who have helped us to navigate the complex regulatory landscape. We would like to thank them and the MoneyThing team who have all contributed to our authorisation.
There will be a few changes as a result of our authorisation. Significantly, we are no longer able to pre-fund loans and we will be introducing new lender terms for new loans. A full update on the changes and how they will affect lenders will be provided shortly.
Now we are authorised we can look towards launching an IFISA offering to lenders. This will be subject to HMRC approval and we will release further information in the coming months.
Fellow Finance is a p2p lending marketplace in Finland. It started 2013 with loans to Finnish consumers, and later added Polish consumer loans and loans to Finnish SME’s. Since launch more than 100 million EUR in loans were funded. See earlier blog coverage on Fellow Finance by P2P-Banking.com.
The basics are:
minimum bid is 25 EUR
no investor fees (except for 1% fee for selling on secondary market)
loans rated from 1 star to 5 stars, interest rates depend largely on this rating, terms up to 7 years
underbidding auctions, but in practise most bidding is done by allocator (autoinvest) at a ‘market rate’
I started a small test investment early in 2016, but really started building my portfolio from autumn 2016. Since then I have deposited 4,000 Euro. I currently invest only in Finnish consumer loans and concentrate on 3 and 4 star loans for which the market rates are currently 13% and 15%. The Finnish consumer loans are covered by a buyback guarantee of 70%, meaning in case they are 90 days overdue, they will be sold for 70% of outstanding principal to a collection agency.
My investment on Fellow Finance is conducted solely through the allocator (the autoinvest) function.
My current Fellow Finance allocator settings – click to enlarge
Basically for me Fellow Finance is a mostly hands-off investment running on autopilot. I do log in at least bi-weekly to check if the market rates have changed. The market rates do fluctate sometimes at +/- 1%, and I felt it necessary to tweak the rate of my allocator then to keep it bidding (at the best possible rate). Fellow Finance is one of the very few platforms, where investors can configure the autoinvest to buy on the secondary market, but I have not used that. Also so far I feel no need to use the secondary market for selling. While several of my loans have gone late, they all catched up and none have defaulted. But my portfolio is still very young so it is bound to happen sometime in the future. The Fellow Finance statistics page gives figures for past loss rates by credit grades. It also shows that interest rate levels have sunk sharply in the end of 2015, beginning of 2016 – I guess I should have started to use this marketplace earlier.
Getting money deployed can take a while, as a lot of the bids (loan reservations) are cancelled. I started with 25 EUR bids by the allocator but to speed deployment up, I increased my maximum bid size to 60 Euro.
Overall the website – which is available in english language – is good, only sometimes a tad slow to respond. A mobile is needed to receive SMS codes to confirm some actions.
My plan it to increase my portfolio by another 1,000 Euro, bringing it to 5,000 and then to reinvest proceeds and see how it develops over time.
What are your Fellow Finance experiences? There are over 150 posts on the German investor’s Fellow Finance forum thread. Reviews there are mostly positive in tone.
Incomlend is a unique invoice exchange connecting businesses and private funders on a global level. The Incomlend platform serves as a marketplace where funders with capital can purchase trade receivables from suppliers at a discount. As a result, Funders get profit from the discount, while the Supplier get cash on the spot.
What are the three main advantages for investors?
Security.
We are the first platform in operation to fully insure the capital of our funders against Buyer payment default on all of our trades. Our Credit insurance is provided by a world leading insurer specialized in international Trade finance.
Furthermore, funds are secured on a segregated account managed by an independent trustee, limiting the risk of funds misuse by the platform.
Global scope. We are the first platform to offer funders an unprecedented worldwide diversification opportunity allowing them to be positioned on multiple countries and currencies.
Profitability. By accessing our invoice discounting trades, funders benefit from superior return levels as compared to current options for short term liquidity placements. The invoice repayment cycles are short (up to 120 days) allowing investors to accelerate capital rotation and profit, while keeping liquidity accessible in the short term.
What are the three main advantages for borrowers (Suppliers)?
Global Scope. We are a natively international platform, offering Suppliers to fund their Export receivables in multiple countries and currencies, while also covering their domestic receivables.
Funding flexibility: We provide Non Recourse funding and require No collateral. Suppliers can access funding without long-term contracts or obligation to channel all the sales through the platform are required. Funding is provided off balance sheet, allowing SME’s to keep their indebtedness intact.
Funding efficiency: 100% of funding requests on the platform are filled, funding lasts less than a day on average.
What ROI can investors expect?
More than 10% return annualized, net of fees, if capital reinvested on an annual rolling basis.
How does Incomlend rate the creditworthiness of invoice sellers and invoice buyers?
Our main focus is on the Buyer payment risk, as funding is provided non-recourse to the Supplier. The Buyer payment risk is covered by a worldwide credit insurer, which applies its own internal rating to each Buyer prior to onboarding on the platform. Each Buyer must be rated between 1 to 5 (out of 10, 1 being no risk and 10 being high risk), as per our Credit Insurer’s classification.
Incomlend does not provide so far an internal rating on Suppliers, as the risk is not borne on them and as any type of internal rating would be considered as Financial advisory, requiring specific financial licences under the Singapore regulation.
Incomlend provides objective data on the features of the Buyer-Supplier relationship map, such as invoice confirmation, goods confirmation, length of buyer-supplier trade relationship, leaving room for jusdgement to the investors.
Can you please describe how the integrated insurance works and the benefits it offers?
Our insurer covers up to 90% of the invoice face value, and Incomlend finances maximum 90% as well, which means that the capital invested by the funders into each invoice is 100% covered.
The insurance protects the investors against risk of default from the buyer (situation where the buyer does not pay the invoice at maturity).
At the onboarding stage, each Supplier is required to provide information on its buyers. Each buyer is then screened and financials analysed by Incomlend. Subsequently, should the Buyer satisfy our internal scoring matrix criteria, the Buyer is submitted for Insurance coverage approval to the Credit insurer.
If the Credit insurer accepts to cover the buyer, a maximal funding limit will be set by the Credit Insurer, which Incomlend monitors to prevent crossing the maximum allowed coverage mark. If the Credit Insurer refuses to cover the buyer, the Supplier’s invoices issued to that buyer will not be paid.
If there is a buyer default, the Credit Insurance is activated and funds are reimbursed starting from 60 days after default (maximum possible reimbursement limit is 270 days, depending on the specific situation of the buyer and recovery actions involved).
Is the technical platform self-developed?
The front end of the exchange platform has been developed based on a white label solution, while the back office systems have been customized in house based on a standard solution.
What was the greatest challenge so far in the course of launching Incomlend?
An important challenge was striking the deal with our Credit Insurer, which was reluctant at first to work with a fintech platform, a totally new framework for them.
Can you please describe the market environment and regulation in Singapore?
The market is quite competitive in Singapore in terms of peer to peer lending and invoice trading in particular. Demand for invoice trading is high from the investors, while companies progressively open up to the alternative finance channels
The Monetary Authority of Singapore (MAS) is the financial local regulator. The MAS is strongly backing and promoting the fintech sector in Singapore, the ambition being to become a major international hub for fintechs. The MAS provides a flexible and advantageous environment for fintech, involving as well major financial instutions for the regulatory sandbox.
The MAS has been observing the fintech industry and so far has not regulated the sector as the FCA did in the UK. Howver, the MAS talks directly to different platforms and monitors activity to make sure investors are protected. Some platforms, for instance, have been required by the MAS to obtain a financial advisor licence due to their loan activities.
Under the MAS Securities act, a trade receivable is so far not considered as a security, while trading invoices at a discount is not considered as a loan provision activity, which involves interest accrual.
Incomlend applies international KYC/AML standards to all its clients while creating progressively a reserve capital by deducting a targeted percentage from each trade.
Which marketing channels do you use to attract investors and borrowers?
Introducers, Agents, Chambers of Commerce, Professional Associations, Forums and conferences, Business services networks (insurance, accounting, incorporations), Private business clubs, VC/BA clubs and associations, Private Wealth management networks, PR, SEO, targeted digital campaigns, social networks and other online media.
Is Incomlend open to international investors?
Absolutely, this is natively the Incomlend model.
Where do you see Incomlend in 3 years?
In 3 years, we see Incomlend crossing the 1 billion USD mark of funded invoices on the platform, world leader of invoice trading and supply chain based on the marketplace funding model.
We also see Incomlend in 3 years as a provider of a diversified range of trade finance instruments (including LCs, payables finance, guarantees), as well as a market reference in terms of digital invoice payments and exchange standard protocols.
P2P-Banking.com thanks Dimitri Kouchnirenko for the interview.
