interview

Interview – Finbee the First Year

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P2P-Banking.com Interview with Laimonas Noreika, CEO of Finbee

You launched Finbee a year ago. Can you sum up the major developments since?

More than 3,000 investors have issued 2M EUR worth of loans via FinBee and none of them lost any money due to a default and our compensation scheme. We are very proud for this result.  We have a reliable and highly skilled team that has built a company that is constantly growing. We are in full legal compliance with existing regulation and are constantly working on developing new products and features for our investors and borrowers.

What were the biggest challenges in this first year?

P2P lending is a relatively new concept in Lithuanian lending market, so raising awareness and overcoming scepticism was one the biggest challenges that we’ve faced from day one. Also, when we started to expand, building a team that can deliver results while maintaining highest standards was also time consuming. From technical perspective, learning the dynamics of supply and demand in FinBee auction was also something that we put a lot of effort to.

finbee-team

In your opinion, which 3 most important skills does a CEO need to successfully lead a fintech startup?

In my personal opinion, a key feature that a CEO has to be experienced in is team building. Even the most outstanding CEO will not be able to achieve much without a great team. A great manager has to have a diverse experience in corporate governance, finance, legal matters, marketing and IT. Also, I would like to emphasise, that simple and transparent communication is vital for a CEO.

Are collection and default figures in line with the expectations & projections you had a year ago?

Current default figures are better that we expected and projected. We expected to operate with 8 to 10 percent of non-performing loans. Currently we have 2.25 percent (it worth noting that we consider a loan to be non-performing when two monthly instalments are missed, that is when loan is 60+ days late). We also project 40 percent recovery of non-performing loans. So we expect 4.8 – 6 percent losses after recovery. Having in mind that investors now invest on 26 percent interest rate on average, they can expect 20 percent returns even without our compensation fund.

We achieve this by minimizing the chance of default with wide range of measures. For example, we check every single borrower using more criteria than is required by regulation. Also, we meet each and every one of them personally. We confirm only 7 percent of loan requests and only then pass them to the investors. Continue reading →

Interview with Robin Buschmann, CEO of Giromatch

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What is Giromatch about?

Giromatch promises its customers “Better Banking Together”. We are a Direct Lending platform and offer our prime retail borrowers a complete digitized loan process at top rates. For investors we offer in this low yield environment a complete new asset class, namely the Deutschlandportfolio. What previously has only been accessible by banks, is now available to everyone – investing into a diversified prime loan portfolio and achieving an attractive return while keeping risks at a manageable level.

What are the three main advantages for investors?

The first great advantage for investors is that they get access to this new asset class at no costs. Secondly, the investment into the Deutschlandportfolio is automatically diversified. This is being achieved by a matching algorithm that optimizes each investment. The third advantage is the security-pool. Giromatch deposits a certain amount of each earned euro into the security pool in order to build up a security cushion for investors.

What are the three main advantages for borrowers?

The advantages for our borrowers result from the digitized loan application process. The loan application can be finished online in less than 10 minutes, no matter if you access Giromatch from home or mobile. A second advantage is the instant loan term confirmation without registration. After one enters all credit relevant facts, we show a customized rate, which we try to stick to as long as the input data was correct. A registration is not necessary in order to get a customized quote. A third advantage is our technology driven approach during the data verification process. A borrower does not need to send us documents proving the credit history. All we need from the borrower is a temporarily login into his/her current account, such that we can instantly confirm the credibility. Nevertheless, we think the most important advantage are the low rates we offer, which is only possible due to our digitized and cost-saving structure.

What ROI can investors expect?

Robin BuschmannThe ROI depends on the portfolio the investor chooses. We provide two different maturities. The shorter-term Deutschlandportfolio runs for three years and has an estimated gross return of 3.60 % p.a. Investors who choose the portfolio with the investment period of five years can expect a gross return of 4.00 % p.a. Due to our strong credit checks we anticipate no more than approximately 1% losses p.a. post recovery due to expected defaults.

How is your company funded?

We were able to inspire several business angels from the financial industry for our seed funding round. Hence, we were able to not only fund the company but also to win many important contacts in the financial industry. Prior to the seed round we invested our own money and money from friends and family. And we were granted an EXIST scholarship by the Bundesministerium für Wirtschaft und Energie (BMWi). Continue reading →

Interview with Gideon Valkin, CEO of FriendlyScore

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What is FriendlyScore about?

FriendlyScore is about allowing borrowers to use their online footprint as a way of increasing the amount of information a lender has about them. This can be useful for borrowers who lack credit history to get access to products they deserve, and also for allowing borrowers with some history to get better products by making lenders more comfortable with their risk profile.

How can your company help p2p lending marketplaces? Can you please share some references?

We help lending marketplaces make better credit decisions by enabling them to get way more data on their customers. By incorporating FriendlyScore into the platform’s decision engine, we can help prevent outright fraud; validate user identity and personal information; and most importantly, gain propensity insights from the users behaviour. This allows the platform to approve more borrowers (or lenders), reject more fraudsters and bad borrowers, as well as price their risk more accurately.

Gideon ValkinA borrower your software identifies as creditworthy has been previously ruled out by the scoring mechanism of the marketplaces. How would the marketplace deal with this loan when showing a credit grade/score class for this loan to investors? Assign a new class?

Our most common use case in the p2p space is for FriendlyScore to be offered as an optional way for borrowers to bump up to a higher internal credit rating if they get a high FriendlyScore. In other words, it is an opportunity for borderline declines to get bumped up to higher-riskaccepted, and for the accepted applications to get a better risk grade and hence a lower interest rate from the lending community. This allows the marketplace to increase approvals and hence conversion and also to more competitively price good borrowers. As our algorithm develops, we expect to be able to function as a standalone credit score.

How do you price your service for p2p lending marketplaces?

Our standard pricing is on our website at https://friendlyscore.com/page/pricing. We charge a subscription price to make the decision simple and easy for marketplaces. We are open to alternative, variable pricing models where they make more sense for the customer on a case-by-case basis.

Do you think your service will be more beneficial for marketplaces in developed countries or in developing markets or what factors indicate in which markets you could add most value?

We can service marketplaces in any market because, at the core, we are simply a data enrichment and machine learning platform for improved decisioning. We are however seeing steadily increasing interest from emerging market lenders which makes sense based on the following two macro factors that drives demand of our product:

1) Shortages of credit bureau data (much more prevalent in emerging markets). 2) High internet and social media penetration (much higher in developed markets but converging quickly). We will always be able to help developed market lenders access non-traditional borrowers (students, young professionals and foreign nationals). However, in developing markets where vast portions of the population lack financial history, and will soon be using the internet as much as anywhere else, we have a chance at bridging an accessibility gap in finance that unfairly applies to a large portion of the normal population. Continue reading →

Interview: Commuterclub Pitches to Raise 650K from the Crowd

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CommuterClub is a promising startup currently running a pitch to raise their 2nd round from the crowd. I really like their business model and have invested in both rounds.

Interview with Petko Plachkov, CEO and Founder

What is Commuter Club about?

CommuterClub delivers a new and innovative way to access public transport as a subscription service.

By bringing together a low cost loan with the existing annual ticket, CommuterClub can deliver the savings of an annual, in a far more convenient and attractive package as a monthly payment plan.

Our goal is to continue to bring new innovative products for commuters, delivering value for money and ease of use.

I really like the fact that your business model builds on long customer relationships. What do you do to achieve high customer satisfaction?

CommuterClub operates in a sector dominated by large slow moving monopolies who manage public transportation. Our proposition is to offer an alternative approach to commuters that begins with their needs. Our focus on a simple customer journey, great customer service and a simple product all deliver a fantastic outcome for consumers.

This is key in ensuring high customer satisfaction and providing a real alternative to the existing ticketing options.

The audience of this blog is highly interested in p2p lending. Can you please explain how your company ties into this industry and what role Ratesetter and potentially Zopa play for your financing?

CommuterClub works with RateSetter to fund all loans. As a business P2P was the key building block enabling us to deliver a low cost and flexible product to consumers, something that we would have found exceedingly difficult if we worked with incumbent banks.

We expect to continue to work with p2p going forward and to maintain our close relationship with RateSetter.

The pitch video

The timing of this round is a bit of a surprise to me since you indicated to shareholders recently ‘at our current trajectory we expect to be [able to] sustain growth from retained earnings’. Why did you decide to raise further capital now?

CommuterClub has made tremendous progress in diversifying the business expanding nationally in the UK, launching a B2B solution and also looking to cover other verticals like parking.

This expansion of our product set has also expanded our target market and we are now raising capital to fund our continued expansion and growth.

Name one fact that makes your pitch a better investment than any other pitch on Seedrs.

Real, proven traction backed by millions in loans and thousands of happy customers.

P2P-Banking.com thanks Petko Plachkov for the interview.

This article is not an investment advice. Investing in startups bears significant risks, including total loss of investment.

 

Interview with Gregor Gregersen, CEO of Silver Bullion

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What is Silver Bullion about?

Silver Bullion buys, sells, authenticates and stores physical gold and silver. Since mid-2015 we also launched the option for customers to securely lend and borrow to each other using their bullion as collateral.

What are the three main advantages for investors?

Physical bullion buyers receive the best protection possible (in jurisdictional, counterparty and storage risk terms) against systemic crises by being owners of insured physical property under Singapore law rather than bank creditors exposed to financial crises. They also have a long position in gold / silver. They profit from a financial collapse, hyperinflation or foreign nationalizations.

Alternatively, as lenders they receive a safe return (very low risk) by lending their funds to owners of insured and authenticated bullion stored with us. Lender funds are collateralized by a minimum 200% worth of gold and silver and, should during the duration of the loan, the collateral fall to 125% the borrowers will get a margin call. At 110% we will liquidate (sell) the borrower’s silver and gold to ensure the lender’s funds are always fully covered by liquid collateral.

Lenders can offer their funds at an interest rate and duration of their choosing. Borrowers are then free to accept the best rates and vice versa, thereby creating a Bid/Ask exchange which lets lender and borrowers determine their own interest rates. The system is also inexpensive (0.5% fee) and easy to use as borrowers do not need to be rated or scored due to their collateral.

What are the three main advantages for borrowers?

Because the loans involve so little risk (due to collateral) lenders are willing to accept comparatively low interest rates. Therefore borrowers can borrow cheaply (e.g. 4% p.a.) and unlock their bullion liquidity without selling it. The low rates allow for arbitrage opportunities vs. customer in high interest countries.

Because we have an abundance of lenders Borrowers can quickly and easily get a loan whenever they need it, without any usage restrictions and minimal additional paperwork.

Borrowers can choose to easily roll-over /refinance a loan before maturity. So they could roll-over as needed, giving them flexibility and a source of optional liquidity when needed.

Investors are required to open a storage account first. Doesn’t that deter those that only want to invest?

A storage account is required to do our AML and KYC checks and an account number is the pre-requisite to do P2P transactions. A customer / lender does not need to buy or store bullion and there is no cost associated with opening an account. So there is no downside.

Gregor GregersenWhat ROI can investors expect?

P2P Lenders have received secure returns ranging from 3.5% to 7% p.a. depending on currency, duration and borrower/lender demand. The nature of the bullion collateral also means are also well protected against both a borrower default and systemic defaults in a crisis.

It depends on the lender whether and how he values this risk diversification.

Is the technical platform self-developed?

Yes. It is highly specialized platform that is integrated with our bullion storage system which stores around 120 million SGD worth of physical bullion.

A word about the people who designed this P2P system might be in order. Gregor Gregersen (primary architect) was a senior data architect for Commerzbank (the second largest German bank), Otbert de Jong headed the global risk advisory department at ABN AMRO Bank and was a partner in PricewaterhouseCoopers and Simon Black is the founder of Sovereign Man, which is one of the best resources on internationalisation and spreading your risk. Continue reading →

Interview with Craig Moore, CEO of Beehive

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What is Beehive about?

Beehive is the first and only P2P financing platform in the UAE (United Arab Emirates). Otherwise known as marketplace lending, peer-to-peer finance is the practice of lending money to unrelated individuals, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution. Beehive bridges a significant funding gap that currently exists in the UAE market. Our platform applies the innovative technology of crowdfunding to eliminate the cost and complexity of conventional finance. Businesses bypass conventional intermediaries and receive financing directly from the crowd. This enables them to get faster access to lower cost finance, while investors get better returns. Beehive is a facilitator that enables businesses to secure the funding they need by creating the organizational framework and infrastructure required for community and financial support to materialize.

What are the three main advantages for investors?

The three main advantages for investors are:

  1. No Barrier to Entry: Individual investors can invest from as little as AED 100 into each business listed on the platform and receive monthly repayments currently averaging 12% per annum with reinvested returns. Investors get money transferred into their account in as little as two days.
  2. Diverse Portfolio: By investing on the Beehive platform, investors can diversify their risk across a number of products offered to a variety of companies operating across diverse sectors, with new companies listing on the platform every week. They are able to directly invest in a business they believe in. Investors are also able to buy or sell their finance parts to other investors on the platform through Beehive’s secondary market. This gives investors access to a market place where they can trade finance parts and allows greater access to liquidity and diversification.
  3. Sharia Compliant Structure: Beehive allows investors to ethically invest in some of the most innovative SMEs in the UAE. Beehive supports Dubai’s ambition to be a Global Financial Capital with its innovative Sharia-compliant platform, which helps Islamic finance customers to achieve their financial goals in a more ethical structure, and helps compliant SMEs tap sources of Islamic finance liquidity. Beehive was certified by the Shariyah Review Bureau (SRB) as a Sharia-compliant P2P finance platform in September 2015, making it the first P2P platform in the world to independently confirm its processes are compliant with Sharia principles.

What are the three main advantages for borrowers?

The three main advantages for borrowers are:

  1. Cost of finance: The platform offers considerable savings to businesses that need it: Businesses using Beehive save on average 30% on their financing costs. The average bank borrowing rate (unsecured) for SMEs in the UAE is over 18%, often much higher. Because investors compete for rates in a reverse auction process, business receive the lowest possible average rate from investors.
  2. Time to finance: The Beehive online marketplace facilitates faster, more flexible funding, with companies typically getting a decision on their finance requests in 3 days. The application process is completed online, and businesses receive funding in 14 days or less.
  3. Invoice Financing: Beehive’s SME invoice financing tool is designed to serve SMEs and help them manage their cashflows by closing the gap between the issue of an invoice and the receipt of actual payment. By unlocking the value of their accounts-receivable, they are able to tackle the dual challenges of rising inflation and late payments. These products give SMEs more options to plug invoice gaps, giving them greater control over their business and finances, and thus a greater opportunity for security and growth.

Craig Moore, BeehiveWhat ROI can investors expect?

The average return for investors is 12% per annum with reinvested returns

Please tell me more about Islamic Finance and Sharia Compliance. Is that a main factor for attracting clients?

One of the things we are very proud of is receiving our Sharia Certification. Globally we’re the first platform to be certified sharia compliant. It was our plan from the beginning to make a sharia P2P platform, because it hadn’t been done before and it would open a new asset class to Islamic investors. About 80-90% of businesses on the platform are Sharia compliant. What we find is that if the listing is sharia compliant, then investors will engage with the business whether they are conventional or Islamic, so it is a very attractive feature for both investors and businesses across the board.

How did you start Beehive? Is the company funded with venture capital?

Beehive has so far received two rounds of external funding in addition to founding investment.

Is the technical platform self-developed?

All the technology on the Beehive platform has been developed using in-house capabilities. Our in-house IT development, design and creative teams allow us to be agile and responsive to market needs. Continue reading →