Year End Review of My Bondora Portfolio

In October 2012 I started p2p lending at Bondora. Since the start I did deposit 14,000 Euro. Since then I periodically wrote on my experiences – you can read my last review published in August here. In the 4 months since then, many changes happened at Bondora: New portfolio manager, new dashboard view, new collection procedures, a first version of an API in production, no more transaction fees for buying and selling on the secondary market and Bondora now allows investors to sell and buy defaulted loan parts (60+days overdue). I used this change to sell my overdue Slovakian loans at 87% discount.  I also sold my remaining Spanish loan parts. I did not have much of either of these in my portfolio anyway.

I also reduced my overall portfolio position at Bondora and transferred 11,022 Euro back to my bank account. I managed to sell many of my Estonian loans at a premium. My perception is that the liquidity on the secondary market increased after the transaction fees were removed. Still it is hard to effectively navigate on the secondary market.

I find it hard to price 60+days overdue loans I want to sell on the secondary market. The site Bondpicking.com has charts with recent transactions for defaulted loan sales on the secondary market that can help as guidance.

Currently I still have loan parts with the value of 11,428 Euro outstanding principal. Of these 1,441 Euro are in loans that are overdue and 2,076 Euro are in loans that are 60+ days overdue.

At the moment I have 280 Euro cash available.

My Bondora Portfolio 12/2015
Chart 1: Screenshot of account balance

My interim conclusions after 3 years

I am very satisfied with my Bondora investment. Of the 14,000 Euro investment I already withdrew over 11,000 Euro, meaning my remaining risk (concerning the initial investment) is very limited and I still have a huge portfolio of loans. Currently Bondora shows my ROI to be 25.0%. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 16.3%. Even in a very pessimistic scenario adding up only withdrawals (approx 11,000 Euro), current loans (about 8,200 Euro) and cash (280 Euro), the initial 14.000 Euro grew in three years to a value of 19,500 Euro. Continue reading

How Lendico Uses FinTecSystems to Streamline Borrower Application Process

In Germany p2p lending marketplace Lendico uses a solution offered by startup FintecSystems to simplify the borrower application process. Automatically accessing online banking data for the past 90 days of the applying borrower the service makes the postal submission of bank statements and certificates of salary via postal services redundant. This saves time and costs involved in the verification of the borrower’s loan application.

Co-Founder Christoph Samwer said: ‘The integration […] is an important step to offer our borrowers an application process rid of media discontinuity and to improve our risk assessment‘ (original quote in German, own translation).

Here is what FintecSystems says about their service:

…Our recently released new product called FintecSystems RISK enables lenders to obtain real time financial information about their customers using just their online banking account. This results in a more accurate and seamless loan application processes by enriching existing application processes or existing data.

With FinTecSystems RISK lenders can access up to 90 days of customer account activity. For lenders it is possible to derive certain information of interest from the account activity, e.g. using salary to carry out risk assessments. Also validating or completing financial information of the borrower to have a consistent data basis, while reducing the need for manual interaction efforts and costs for both parties.

With FinTecSystems RISK, we build a bridge between BigData and SmartData. Accurate information about a borrower enables the lender to be more effective with loan terms. Precise and quality data is more important than data quantity. Data quality is the crucial factor to establish an online financing process in Germany and Austria. Eliminating a manual finishing processing step for the lender…

Ratesetter Updates Legal Structure of the Provision Fund

RatesetterRatesetter informed its investors that it will update the legal structure of the provision fund by changing it from a trust to a limited company. Ratesetter was the first UK p2p lending marketplace to introduce a fund to protect investors against defaults (up to the amount available in the fund). So far no retail investor has lost a penny on Ratesetter since the launch in 2010.

Excerpt from the announcement: Continue reading

MoneyPlace and Auswide Bank Enter into Strategic Relationship

MoneyPlace, Australia’s second fully licenced peer-to-peer (P2P) lender and Auswide Bank have entered into a significant strategic relationship and equity deal.
The long term relationship, the first of its kind in Australia, includes a 5 year deal to fund up to 60 million AUD to assist MoneyPlace to grow its consumer lending and for the bank to grow and
diversify its financing activities nationally. Additionally Auswide Bank is taking a 20 per cent equity stake in MoneyPlace.

MoneyPlace launched in October after receiving its retail and wholesale Australian Financial Services licence and provides loans of 5000 to 35,000 AUD through its peer-to-peer lending platform.

MoneyPlace CEO Stuart Stoyan said the relationship is a critical milestone for P2P lending globally and demonstrates how banks can work with P2P lenders to provide fairer, better rates
for all customers. Continue reading

Interview with Sebastian Harung, Founder of Kameo

What is Kameo about?

Kameo is a Scandinavian marketplace for SME loans. It was established to meet two clear challenges in the Scandinavian markets: SMEs do not get loans; investors do not get good returns. By directly connecting them, we hope to make the situation better for both. Kameo’s vision is to include more people in the financial markets.

Note from editor: Kameo will launch around next week.

What are the three main advantages for investors?

  • Better expected returns
  • Support SMEs, the most important employer in Scandinavia
  • Possibility to create diversified portfolios

What are the three main advantages for borrowers?

  • Access to (more) funding
  • Quick and easy loan application
  • Flexible security & collateral structures

Sebastian Harung, KameoWhat ROI can investors expect?

Loans will be offered at 5 – 15 % per annum. At first, there will be no fees for investing through Kameo. We expect low default rates, based on historical data for Scandinavia and our thorough credit assessment. We can conservatively assume it to be around 1 – 3 % (naturally dependent on risk profile).

What is the background of the Kameo team? As some of you are Norwegian, why did you select the Swedish market for launch rather than Norway?

The team currently consists of five persons, of which only I am Norwegian. We have various backgrounds, but the same optimistic view of the future: alternative finance will transform Scandinavian banking, and it will become better for more people – it is the social democracy model, of which we Scandinavians are so proud.

We have a credit analyst with 20 years of SME analysis experience, a CTO that previously co-founded Avanza and developed its platform (Sweden’s largest net broker) as well as a marketing specialist and a business developer with backgrounds from digital marketing and corporate finance, respectively. My background is also from corporate finance at Norway’s largest bank, DNB.

And because we expect to grow, we will be looking to further strengthen the team next year.

While the largest owners are Norwegians, we chose to start in Sweden because the market is larger, it is a well-developed fintech-hub (#2 in Europe after London), and Kameo’s largest owner has a successful startup history in Sweden. In addition, the regulatory regime was easier when we started working with the idea (but this has since changed). We have, though, a clear ambition to cover Norway and Denmark next year, thus creating a Scandinavian marketplace (investors can create portfolios of Scandinavian loans.)

How is the company financed?

Two rounds of equity investments from co-founders, board members and angel investors. And I have sold my apartment and invested everything (except what I intend to lend through the platform in order to fund my daughter’s driver’s license in 16 years).

We will also be looking to raise more capital sometime next year, when we roll out in Norway and Denmark. Continue reading

Interview with Sergio Antón, Co-Founder of MytripleA

What is MytripleA about?

MytripleA is the first and only fully regulated platform operating in the Spanish market. MytripleA is a Spanish business finance platform meeting both short-term and medium-term financing needs of Spanish SMEs. MytripleA offers two different products: 1) insurance guaranteed loans -for more conservative investors- and non guaranteed loans -with higher risk and higher return- and 2) invoice financing.

What are the three main advantages for investors?

We offer an excellent risk-adjusted return to investors with a very robust underwriting process. Our investors receive monthly payments (except for invoice investments). In addition, we offer insurance loans (with close to zero risk) to more conservative investors. The abovementioned advantages and being the only fully regulated lending platform in Spain have allowed us to have a stable and growing investor base.

What are the three main advantages for borrowers?

Fast response to applicants. We are very flexible to adapt our financing to the borrower’ needs. In addition, our financing leaves no records in the Bank of Spain’s debt data base which makes it much more attractive than banking debt.

Sergio Anton, MytripleAWhat ROI can investors expect?

Our ROI in currently 8.30% with zero default rate.

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

My cofounder and I noted that there are thousands of solvent SMEs ignored by the banks and decided to connect personal savings with solvent companies by using technology. We checked the regulatory issues and launched the company once we had obtained the necessary approvals. The company was initially funded by the founders and then we did our first round with GLI Finance and other private investors.

How valuable is it to have an experienced investor like GLI Finance? Can you please give examples how they help you in your business development?

GLI is the expert in the alternative finance sector for SMEs worldwide and is a key shareholder for MytripleA. They are supporting us in areas such us strategy, business development and the security of our platform. In addition, they also provide lending capacity for MytripleA. We are extremely happy to have them on-board. Continue reading

Interview with Vytautas Zabulis, CEO and Co-Founder of Savy

What is SAVY about?

We have created what is best defined by the term “bank”. But our bank is virtual; it differs from a traditional one in that it is exempt from the requirement of capital sufficiency. Borrowers apply for loans and investors grant loans on our platform; it’s a meeting place.

In short, the SAVY P2P lending platform is a virtual bank that (will) operate in three segments:

  • Consumer credits, that is, personal loans;
  • Loans with real estate mortgage (for persons and businesses);
  • Business loans.

We have not yet offered business loans; however, we are planning to offer the service by the end of 2016. Our real estate product will be fully launched by the end of this year. Our secondary market appeared in early 2015.

A standard practice of global P2P lending platforms is that investors transfer funds to an account owned by the platform managers and the latter do the lending. We took a different path. The SAVY interpersonal borrowing platform does not manage the funds of investors directly. Each investor creates their own “personal wallet” in the Paysera e-money institution. They are then entitled to use their funds at their own discretion; for example, they can take their money out as soon as they need it without any intervention from SAVY.
Even theoretical risks for investors’ money are eliminated under this structure. The platform reserves the right to evaluate the creditability of borrowers and allocate investors’ money to the borrowers. Other risks, such as funds being used for other purposes than intended by investors, are simply impossible on our platform.
Paysera is an e-money institution. Investors can be confident as Paysera has 10 years of experience as an e-money license holder in the European Union. Its business in Lithuania is supervised by the Bank of Lithuania.

What are the three main advantages for investors?

  • Safe storage of money. The platform does not manage any investor funds. The funds are kept in dedicated e-accounts of each individual investor. In addition, investors are not charged a fee for investing their capital on the platform.
  • Experienced team. All members of our team and management are experts in their respective fields of business. This is very important in this new, dynamic industry.
  • Possibility to diversify risks. Traditional platforms offer only a single product for their investors. SAVY (will) offer the ability to invest across three different sectors and risk types on one intuitive system.

What are the three main advantages of SAVY platform for borrowers?

  • The SAVY platform is a new alternative for borrowers, something that has never before existed in Lithuania. This is a speedy and cost effective solution compared to expensive payday companies, banks and credit unions.
  • Our platform offers borrowing costs at a price similar to bank credit cards or even cheaper.
  • We guarantee a quick loan. Furthermore, we do not impose any fees on early repayment.

Vytautas ZabulisWhat ROI can investors expect?

Currently, the average return on investment is over 20 percent. Generally, our investors should plan a net return somewhere between 15 and 20 percent for the unsecured product loans. For the secured loan products such as real estate and business loans, they can expect slightly less. The expected return on investment for foreign investors on platforms from Central and Eastern Europe is, generally, much higher than the same metric found on Western European platforms.

What is the background of the SAVY team?

Our team is a collaboration of industry professionals, which is crucial to create an innovative and effective product in the financial sector. For example, our marketing manager is the former general manager of one of the largest Lithuanian consumer credit institutions. We have an internal lawyer with an MA degree in Law from a prestigious university in the UK, who is also a former employee of a private capital fund there. We have a banking professional on our board, well known in the Baltic region, and former CEO of SEB and Šiauliu Bank in Lithuania. An American professional in commercial real estate development is also on our team. […] Continue reading

Technological Revolutions and Financial Capital

Book Technological RevolutionsAre we headed for the next bubble? The book ‘Technological Revolutions and Financial Capital – The Dynamics of Bubbles and Golden Ages‘ won’t answer that question. But it does a good job analysing technological changes in the past and identifying patterns. The author Carlota Perez develops a model of the repeating interplay between finance and the drivers of technological evolution. Published in 2002 the book’s content seems timeless. I recently read it and can recommend it. Available at Amazon US, Amazon UK and Amazon DE.

Interview with Alejandro Cosentino, CEO of Afluenta

What is Afluenta about?

Afluenta is a leading marketplace lending company in Latin America (LatAm) who connects creditworthy borrowers with investors, to create more convenient loans and better investment opportunities. Our advanced technology provides an innovative investment alternative for individuals and institutions lenders interested in getting better yields through investing in consumer loans without the traditional middleman.

What are the three main advantages for investors?

There are not many alternatives for investors across LatAm emerging markets. We believe that Afluenta is a truly new alternative with a potential high net yield and low volatility but being specific Afluenta provides:

  1. Better yields compared with traditional banking products since Afluenta removes banks, as intermediary, and allows to distribute the traditional banking spread between borrowers and lenders.
  2. It’s simple, secure and easy to understand and operate.
  3. There are many features on the platform to facilitate the use and trading fractional loans such as the Secondary Market which allow lenders to have liquidity.

What are the three main advantages for borrowers?

Although, compared with investment alternatives, there are plenty of choices to get a loan in our region, those alternatives are not cheaper, convenient or hassle free for borrowers so we designed a better loan processes and conditions to provide:

  1. Access to cheaper loans than those they can get in the traditional financial institutions
  2. Get loans faster. Applicants get a response about the loan admission in 20 seconds and the loan is funded in approximately 3 days so they get the money much faster.
  3. The entire process is hassle free. Potential borrowers just complete a short application and not are requested to provide physical information. 100% of the process is online.

Alejandro Cosentino, AfluentaWhat ROI can investors expect?

The net yield that investors can expect is, swapped in US dollars, an average of 21.5%. The loans are provided in local currency and always will be in local currencies no matter the country we will be operating in.

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

Afluenta was born in 2010 but for many years I had it in mind since I had a great experience in financial services obtained running American Express in LatAm as well as in Santander in Argentina and worked in Tech industry also in LatAm. In 2011 we fund raised from an angel investor to develop our technological development and then we got the approval from the Argentinean National Securities Commission to launch our operation initially in Argentina in September 2012. Since then we have grown to a large number of loans people to people

Afluenta was initially funded with my savings, then we got two fund raising rounds, Angel one and Series A (both of them Argentinean investors). We are about to close our Series B with US VCs and international institutional investors to support the regional expansion process.

What were the main milestones since your launch in 2012?

We set the rules for this industry in Latin American region. We operate as Lending Club or Prosper do their business in US. Afluenta is the first authorized P2P marketplace in the region. We solved the regulatory and tax issues initially in Argentina and then in Peru using current legislation allowing us to run a marketplace lender without asking for new laws or changing current regulations. On the other side, our technology is world class and Afluenta developed innovative features for lenders to operate simple, faster and profitable such as secondary market, automate investing, CRM of collections among other and add 100% transparency of all the data in the investment platform. Continue reading

International P2P Lending Volumes November 2015

The following table lists the loan originations for November. Funding Circle overtook Zopa measured by new volume followed by Ratesetter. I added two more platforms to the list. I do monitor development of p2p lending statistics 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 services.
Investors living in markets with no or limited choice of local p2p lending services can check this list of marketplaces open to international investors.
P2P Lending Volume 11/2015
Table: P2P Lending Volumes in November 2015. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.
Notice to p2p lending services not listed: Continue reading