Interview with Dimitri Kouchnirenko, Founder of Incomlend

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.

 

Beehive is the First P2P Lending Marketplace to Receive Approval by DFSA

Beehive logoBeehive has become the first peer to peer lending platform to set up offices in the Dubai International Financial Centre (DIFC) and become officially authorised and regulated by the Dubai Financial Services Authority (DFSA).

The new regulation is a first for the region and could catalyse growth of the fintech industry, says Beehive. Not only will it ensure clear governance for fintech businesses but will also provide added protection and peace of mind for peer to peer retail investors. Its introduction is particularly timely as peer to peer lending, is becoming an increasingly important route for small and medium enterprises (SMEs) to access finance.

Beehive was launched in Dubai in 2014 by serial entrepreneur, Craig Moore, aided by Rick Pudner, former Group CEO of Emirates NBD. Read an earlier interview Craig Moore gave P2P-Banking.com. Craig Moore, now said: “We’re delighted to be regulated by the DFSA. This regulation reinforces Beehive as one of the fintech leaders in the region and we feel this greatly expands the opportunity to further help SMEs and the wider economy.” Continue reading

International P2P Lending Statistics February 2017

The table lists the loan originations of p2p lending marketplaces in February. For many companies it has been a slow month. Funding Circle continues to lead ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 408 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 Klear, Viainvest and Bitbond.

Milestones reached this month are:

  • Funding Circle reaches 2 billion GBP in originations since launch
  • Fellow Finance crosses 100 million EUR since inception
  • Geldvoorelkaar hits 100 million EUR since inception

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available.

P2P Lendng Statistic 02/2017
Table: P2P Lending Volumes in February 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.

Notice to p2p lending services not listed: Continue reading

Rebuilding Society Receives Full FCA Authorisation

Rebuilding Society LogoP2P Lending marketplace Rebuilding Society just announced that it has received full FCA authorisation.

Rebuilding Society has been awarded full authorisation from the Financial Conduct Authority in recognition of our compliance with sector-specific regulations.

We are very excited to share news of this major achievement and important milestone with our community. Authorisation means that we meet the rigorous standards set by the FCA and that we can soon start to offer the Innovative Finance ISA.

Although we have been operating under FCA rules on Interim Permission since April 2014, being granted full authorisation helps us to continue building on the important relationships of trust we have with all our clients. We are proud to have achieved this milestone ahead of many other platforms, which we believe is testament to our small but dynamic team, systems, processes and controls.

It has been a long journey, consuming considerable energy and investment, since we applied for full authorisation in November 2014. We have continued to grow as a business and improve on our core processes throughout. The regulatory landscape is continuously changing, and we will make sure we stay abreast of developments that arise from our post-implementation review.

We are committed to delivering a top-quality service to all our customers, to assist investors by providing multiple investment options and to assist our borrowers in finding business finance that is more than just a financial transaction. We are now taking pre-registrations for the IF ISA and will confirm once we can on-board new accounts. Please look out for further updates; we know that many of you are keen to benefit from frequent, compounded returns.

Lendix Review – First Repayment

Since my p2p lending investments are heavily concentrated on UK and Baltic services, one of my New Year’s resolution for 2017 was to diversify into other markets. Therefore in January I opened an account at French p2p lending service Lendix. Lendix is a p2p lending marketplace offering loans to SMEs in France and Spain (read earlier articles on Lendix). It is one of the larger players in continental Europe. Signing up was straightforward. While the minimum bid on loans is just 20 EUR, the minimum amount for deposits and withdrawals is 100 EUR. Investors can deposit either via bank transfer or via credit card (limited amount). Depositing via credit card is a nice feature which is rarely offered by p2p lending services. I like it because I can react within a minute to new loan announcement emails. This is necessary too, as many new loans are fully funded within an hour – and there is no autoinvest. Nearly all actions require two factor authorisation by a code sent to my mobile.

Lendix loan ratingLendix loans carry interest rates from 4 to 9.9% and are for loan terms between 3 and 84 months. There is no fee for investors and no withholding tax for foreign residents. Each loan is assigned a rating score of A, B or C by Lendix. There is also a detailed loan description for each loan. While most of the site is available in English language, loan descriptions and contracts are in French language only.

So far Lendix has done a very good job in vetting borrower applications. The default rate to date is low – only 0.11%. However the marketplace is young and growing and I expect the default rate to rise with time. Also it remains to be seen, if the perfomance of the Spanish loan will be comparable to the French loans.

As there is no secondary market, investors are bound hold the loan to maturity.

Review of my Lendix portfolio

I only just started in January. I concentrated on A and B grade loans, putting 100 EUR in most of them and 20 EUR in those that seemed not as convincing to me (e.g. a loan to a hotel that, when I looked it up on a hotel booking comparision site, had less satisfied customer reviews than the four other competing hotels in the same village). I skipped the new spanish loans.

Right now I have invested 640 EUR in 8 Lendix loans. I would have invested more, but I found the dealflow to be rather sparse in January and February. My average interest rate is 5.9%. This month I received my first repayment rate. Experiences of more seasoned investors report that repayments are usually on-time.

New investors get 20 EUR cashback bonus from Lendix when signing up via this link, once they have invested at least 500 EUR.

 

Lendix loan portfolio
Screenshot of my Lendix loan portfolio – click for larger view

 

Finbee Adds Business Loans

finbee logoP2P lending marketplace Finbee has so far offered consumer loans only. Now Finbee is extending the product range to SME loans. Finbee sources the applying companies through a separate website and will focus on small loans up to 15K EUR and a term of 12 months. For most business loans rates will be fixed without an auction (which Finbee uses to set interest rates for consumer loans). Different to consumer loans, investments into business loans will not be covered by the Finbee compensation fund (CSF), if the loan defaults. Each loan application will be individually assessed, by assigning risk grade from A+ to D, where A+ is a low risk loan, D – high risk loan, based on reputation of the management (20% of risk grade), financial sustainability (60% of risk grade), market situation (20% of risk grade).

Audrius Griskevicius, head of SME lending, told P2P-Banking: ‘SMEs in Lithuania have very limited access to financing. As result of this, the government issued a law, allowing p2p lenders to issue loans for small business. Finbee took an active role in development of necessary regulation and we are very proud to be the first one to receive a license of p2p lending to SMEs.’

The first business loan listing is online. Magava wants to borrow 10K EUR working capital for 12 months at 15% interest rate. Investors have to complete a self assessment survey before they can invest into business loans.

Bitcoin Based P2P Lending Service Bitbond Raises 1.1M EUR Round

Bitbond LogoSME lending platform Bitbond today announced the closing of an equity funding round of 1.1 million EUR. This round brings Bitbond’s raised equity capital to a total of 2.2 million EUR.

Led by mobilike founder Şekip Can Gökalp, a number of business angels contributed to the round. Among them were Fyber founders Janis Zech and Andreas Bodczek as well as Kreditech co-founder & CEO Alexander Graubner-Müller.

Bitbond will use the additional funds for further product development and to grow its user base in markets which are underserved by traditional lenders. Over 1,600 loans worth 1.2 million USD were originated on Bitbond since its launch. 76,000 users from 120 countries registered with the service to date.

Founder & CEO of Bitbond Radoslav Albrecht said: “The additional resources will help us to continue realizing our mission which is to make lending and borrowing globally accessible. We are happy to have such experienced investors supporting us on this exciting journey.” Albrecht contributed a guest article on bitcoin p2p lending in the past on P2P-Banking.

In October 2016 Bitbond received their own regulatory licence by German financial services supervisor BaFin. This makes the service one of the first and only regulated blockchain based financial services providers.

The startup from Berlin connects investors who look for above average fixed-income investment opportunities with small business owners who need a loan. To make global cross-border lending possible, the platform uses the bitcoin blockchain for payment processing. Continue reading

Landbay Launches IF ISA Offer Today

Today secured by property p2p lending marketplace Landbay launches its Innovative Finance ISA (IFISA). The IF ISA offer carries an interest rate of 3,69%. The minimum investment amount for this product offer at Landbay is 5,000 GBP. There is no account opening fees, no ongoing fees and no transfer-in fee. There is a 50 GBP transfer-out fee.

Investors can make use of the current annual tax‐free ISA allowance of 15,240 GBP. In the next tax year the allowance will rise to 20,000 GBP.

Survey Open for New Study on Asian Fintech

The University of Cambridge, Monash Business School and Tsinghua University launch the 2016-2017 Asia Pacific Alternative Finance Industry Survey with the support of major industry associations across the region.

The Cambridge Centre for Alternative Finance at University of Cambridge Judge Business School, Australian Centre for Financial Studies at Monash University and Tsinghua University Graduate School at Shenzhen are teaming up to launch the 2016-2017 Asia-Pacific Region Alternative Finance Industry Survey with the support of more than 20 major industry organisations across the region. This is the largest regional study to date focused on crowdfunding, peer-to-peer lending & other forms of alternative finance.

From equity-based crowdfunding to peer-to-peer consumer and business lending, invoice trading to reward-based crowdfunding, these alternative financing activities are supplying credit to SMEs, providing venture capital to start-ups, offering more diverse and transparent ways for consumers to invest or borrow money, nurturing creativity, fostering innovation, generating jobs & funding worthwhile social causes across the Asia Pacific region.

Opening on February 15th 2017, this benchmarking survey aims to capture the key trends, developments, size, transaction volume and growth as well as the impact of changing regulations on the alternative finance markets across Asia in 2016 – building on last year’s inaugural study.

Last year’s inaugural report – Harnessing Potential – gathered survey data from 503 leading alternative finance platforms operating in 17 Asia-Pacific countries and regions. The study was cited by over 100 mainstream media organisations and has informed policymakers and regulators of industry developments in Asia Pacific countries including Malaysia, Singapore, India, Australia, Hong Kong and Indonesia for example. The report estimated the total Asia-Pacific online alternative finance market to have grown 323% year-on-year to reach 102.81 billion USD in 2015. China is the world’s largest market by transaction volume, registering 101.7 billion in 2015. Outside mainland China, the rest of the APAC region accrued 1.12 billion USD in 2015 with a 313% year-on-year growth rate from the 271.94 million raised in 2014. The authors hope this year’s study will dive even deeper into the growth and dynamics of the APAC alternative finance market. Continue reading

Auswide Bank Takes Over Controlling Majority of P2P Lending Service MoneyPlace in Australia

Auswide Bank Ltd (ASX:ABA) is increasing its equity stake in peer-to-peer lender MoneyPlace Holdings Pty Ltd (MoneyPlace). Auswide Bank will have a controlling interest of at least 51% in MoneyPlace with the prospect of increasing that interest up to 75% dependent on the final take up of other MoneyPlace shareholders in a capital raising initiative being undertaken by MoneyPlace.
MoneyPlace launched in October 2015 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. Auswide Bank acquired a 19.3% equity stake in MoneyPlace in January 2016 while also committing funding to the Melbourne – based P2P lender’s consumer lending program.
Managing Director, Martin Barrett said Auswide Bank has been impressed with the platform, skills, capability and performance of MoneyPlace over the last 12 months, “Our funding has now exceeded 8 million AUD over the last 7 months and momentum continues to build. Loan quality has also been performing above expectations and we remain optimistic regarding future growth opportunities for the MoneyPlace and Auswide Bank partnership.”