singapore

Interview with Dimitri Kouchnirenko, Founder of Incomlend

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What is Incomlend about?

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?

  1. Security.
    1. 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.
    2. Furthermore, funds are secured on a segregated account managed by an independent trustee, limiting the risk of funds misuse by the platform.
  1. 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.
  1. 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)?

  1. 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.
  1. 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.
  1. 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.

Dimitri Kouchnirenko, IncomlendCan 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.

 

Silver Bullion Reports First Year Results for Gold & Silver Secured P2P loans

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Silver Bullion Pte Ltd in Singapore reported today, on the anniversary of the launch of their bullion secured peer-to-peer(P2P) loan platform, that the platform has funded over S$11 million across more than 400 successfully matched loans. There were zero occurrences of borrowers defaulting on their loans. One hundred percent of lenders, with loan tenures expiring within the first year, received their principle with interest on time.

Launched on 5th August 2015, Silver Bullion offers a p2p marketplace that allows borrowers to obtain a loan using physical gold and silver bullion as collateral. This gives lenders, seeking a good rate of return, confidence that their investments are safe.

Silver Bullion’s CEO, Gregor Gregersen, commented: ‘The first year results of our P2P loan platform shows that owners of physical gold and silver like to have the option to be able to borrow short term funds at good rates with the bullion that they store with us. Now, they are able to reinvest with the borrowed funds whilst continuing to own bullion and benefit from rising gold and silver prices.’

P2P-Banking.com conducted an interview with Gregersen earlier this year.

silver-bullion-vaultDue to the safety that Silver Bullion’s loan platform gives to lenders, 72% of the matched loans were initiated by borrowers. The company has seen more than 30 loans matched consistently each month since March 2016 – a rate of more than 1 matched loan per day. Interest rates across all loan tenures currently hovers between 2.5% and 4.5% per annum.
Unlike unsecured P2P lending platforms, loans matched by Silver Bullion’s lending platform are fully backed by physical gold and silver. Loans with tenures longer than 6 months begin with a collateral-to-loan value of 200%. The exceptions are loans with the 1 month tenure which have a lower collateral-to-loan value of 160%.<

Borrowers’ collateralized bullion is stored at Silver Bullion’s vault, The Safe House. They are covered by one of the most comprehensive insurance policies in the industry that also insures against inside jobs and any unexplained losses.

 

Overview of the Regulatory Framework for P2P Lending and Equity-based Crowdfunding in Singapore

Guest

This is a guest post by Pawee Jenweeranon, a graduate school student of the program for leading graduate schools – cross border legal institution design, Nagoya University, Japan. Pawee is a former legal officer of the Supreme Court of Thailand. His research interests include internet finance and patent law in the IT industry.

1. Introduction

In the recent years, it is inevitable that the financial technology or Fintech takes the significant role toward the evolution of financial services industry in this region. In other words, Fintech normally be used to improve the financial industry services.

In 2015, the Monetary Authority of Singapore (hereinafter referred to as “MAS”) has committed two hundred twenty five million Singapore Dollar (around 166 million USD) to support the development of Fintech industry for the startup ecosystem in the upcoming years[1]. This is a good reflection of the significance of the financial technology or Fintech development in Singapore.

From the economic perspective, Small and Medium Enterprises (hereinafter referred to as “SMEs”) are important part of Singapore’s economy. SMEs account for 99 percent of all registered enterprises in Singapore[2]. From this reason, enhancing the competitive capacity of Singapore SMEs is essential for Singapore economy development.  Even almost all of the SMEs in Singapore are supported by the Governmental Enterprise Development Agency and Centers[3], (more than 100,000 SMEs got funding support by the Singapore government[4]); however, internet financial technology was also proposed as an alternative mechanism for enhancing the competitiveness of Singapore SMEs in the recent years[5].

 

2. Regarding Peer to Peer Lending


2.1 Background
Generally, there are many peer to peer lending platforms in Singapore; however, they normally lend money to businesses rather than individuals due to the strict regulation for money lenders. The additional limitation on lending to low-income borrowers[6] who are Singaporean citizens or permanent residents which is another requirement should be considered by the lenders.

In general, money lending in Singapore is mainly regulated by the Moneylenders Act 2010 and the Moneylenders Rules 2009. For the Moneylenders Act 2010, due to the main purpose of this act is to develop consumer protection mechanism to protect borrowers of small amount loans[7], this is the reason why the act provides stringent limitation for moneylenders to operate their business. This is another key different of money lending law of Singapore compared to other countries in Asia such as Hong Kong which focusing more on lending activity[8]. Briefly, the act requires moneylenders to hold the Moneylenders license with obligations and limitations for licensee[9].

In Singapore, even there are strict regulations in the existing law relating to a money lending business; however, there is the legislative effort of the Singapore government to address the issue regarding Securities-based Crowdfunding, which can reflect the understanding of the Singapore government toward the development of Financial Technology (Fintech) and the supporting regulatory framework.[10]

2.2 The Regulatory Framework for Peer to Peer Lending Business

From the document published by the MAS on Lending-based Crowdfunding – Frequently Asked Questions (FAQs)[11], generally, the operation of P2P lending is restricted by MAS under the Securities and Futures Act (Cap. 289) (SFA) and the Financial Advisers Act (Cap. 110) (FFA).

Specifically, the P2P lending business needs to prepare and register a prospectus with MAS in accordance with Section 239(3) of the SFA. In addition, not only the registration of the prospectus but also the P2P lending platform need to follow the licensing requirements, particularly, the P2P lending business which fall within the scope provided by MAS needs to hold a Capital Market Services (CMS) license. Continue reading →

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 →

3 Marketplaces Join Forces to Form Crowdfunding Alliance in Singapore

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Today marks a significant chapter in Singapore’s fast-growing crowdfunding industry, as crowdfunding platforms CoAssets, FundedByMe, and New Union announce an alliance that sees the three platforms combining forces to develop the local and regional crowdfunding industry.

singapore-flagAll three platforms – CoAssets, FundedByMe, and New Union – today have international reach of investors and campaigns. Together the alliance recorded over S$200 million dollars raised through crowdfunding campaigns in 2014, with growth expected to accelerate over 2015.

Said Getty Goh, founder and CEO of CoAssets, “As an individual company, there is only so much we can do. Hence, I am excited and honored to be a part of this three-way alliance. However, this is just a first step and we hope that more stakeholders will join this alliance so that it can eventually pave the way for Fintech trade association. As Fintech is a burgeoning sector, the best way forward is to come together and engage the authorities collectively. Akin to the Singapore Venture Capitalist and Private Equity Association (SVCA) or Real Estate Developers Association of Singapore (REDAS), having a Fintech association is not only a good way to promote self-governance, it can also bring greater awareness to what this industry is all about.”

“We are excited about this development with likeminded partners in the industry. There’s so much more we can do together, once we focus on developing the market here and globally in 2015. Crowdfunding is definitely on an uptrend –– we experienced over 600% growth in 2014 year-on-year –– and expect that the next wave of growth will exponential especially considering this alliance, coupled with surging Asian demand,” said Daniel Daboczy, founder and CEO of FundedByMe.

“Technology and the world-wide-web have become irreplaceable to our daily life, and every day business — and today, this alliance represents the emerging wave of financial services that meet crucial needs in the business community. Our commitment is to work closely with government agencies and financial institutions to spearhead a progressive and trustworthy crowdfunding environment,” Jeremiah Lee, Founder and Managing Director of New Union.

The three platforms plan to launch their first combined crowdfunding project in Q3 of this year, as well as joint conferences over the months following their alliance announcement. Continue reading →

Milaap Raises 1.1M US$

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P2P microfinance service Milaap (see earlier coverage on P2P-Banking.com) raised 1.1 million US$ from Jungle Ventures (Singapore), Toivo Annus,Lionrock Capital, Jayesh Parekh and Unitus Seed Fund. The current round of funds will be utilized to expand engineering and marketing investments for enhancing the online product experience, and to invest in scaling up marketing and outreach efforts.

Milaap says that so far 100% of the microfinance loans originated have been paid back.