Interview with Jana Mücková, Relationship Manager at Bondster

I interviewed Jana Mücková, Relationship Manager at Bondster (see her bio at the end of the article). By registering via this link and entering promotion code 5506 new investors get 1% cashback on all investments in the first three month.

What is Bondster about?

Bondster is one of the fastest growing fintech companies in the field of P2P (Peer-to-Peer) loan marketplaces in Europe and the very first online investment platform of its kind in the Czech Republic. Bondster connects providers of loans with retail investors. Investors (individual or companies) may invest their free funds into loans already provided by different providers. Investors can choose from different types of loans, maturity, security, providers. Investors can also see the repayment history of the debtor to whom the loan had been provided and they can also see the basic information about the debtor.

What are the three main advantages for investors?

The biggest advantage is definitely high returns on loans. Moreover, these loans are either secured (by real estate or movables) or offered with a Buyback Guarantee (in case the debtor does not repay the loan, the provider has to buy it back from the investor) which eliminates the risk for investors. Imagine your money sits in the bank account, you lose money in real terms every single day since the inflation rate is higher than the nominal interest rate on your bank deposits. On Bondster investors can earn more than 11 % on Euro investments in average. Do you know a bank that could offer you such a return?

Bondster also offers loans with unique features such as Exit from the investment or Guarantee of Liquidity. This is especially popular with Investors that are more risk averse and prefer more liquid investments. Exit from Investment means that the investor can get back the outstanding principal at predetermined points in time after the investment had been executed (after a week, month, half a year etc.) for a predefined fee. Guarantee of Liquidity allows investors to withdraw the invested amount (outstanding principal) any time for a predefined fee.

From what we have learned from our investors, our choice of Providers is really appreciated. We carefully choose our partners. Providers we cooperate with are always either well established companies in the local markets with a very good track record, or younger companies but with huge potential and experienced people with strong professional background in the management.

What are the three main advantages for loan providers?

Our partners can benefit from alternative and flexible financing we offer. In case a provider needs for example some extra funds for its development, he can upload an extra tranche of loans to our platform and receive these extra needed funds from our investors without any additional administrative burden or costs. This is a huge advantage for providers because applying for a business loan in a bank or negotiating with and raising money from big institutional investors takes much more time and is often also more expensive.

Our onboarding and due diligence process are on one hand very complex, but on the other our team is always willing to help, assist and explain and we usually manage to complete it within a few weeks.

Our team really likes challenges, and this is why we are so flexible. We always try to find tailored-made solutions.

What ROI can investors expect?

The average return on Euro investment is now 11,49 %, on Czech investment it is a bit less around 9,32 %.

How does Bondster attract, select and vet new loan providers?

… We got to the stage when the providers approach us by themselves. They learnt about us through P2P forums, blogs or influencers and realized that they can be more visible on Bondster than on other older platforms. Generally, we look for strong and established partners in the local markets or strong groups operating in several countries. We now negotiate with providers outside EU to offer our investors new opportunities for diversification.

Can you please tell us a bit about your background and the team’s background?

Well, our team has 10 members with a professional background in banking, IT, portfolio and project management, and customer care. I personally worked 5 years in banking sector which is quite rigid environment. I needed more space for my ideas. I am a kind of person that is never happy because there is always something that can be improved, right? I think I drive my colleagues at Bondster crazy sometimes because of that, but online marketplace is that kind of business that has to be always challenged and innovated to follow current trends and that is exactly why I love it.

Is the technical platform self-developed?

Partially yes, but we also outsource. The technical development of the platform is secured by one Irish company with a long-term experience in developing innovative software for banks.

How is the company financed? Is it profitable?

Bondster is fully owned by the Czech investment company CEP Invest Private Equity. At this stage, we invest all the available funds and energy into development. We want to create a platform that is not only user friendly, but also offers something extra. We want to be better than our competitors and that is why we value our investors´ ideas and appreciate their recommendations.

What were the main challenges when launching your platform?

The biggest challenge was to find the investor and a strong business partner. It is not only about the money, it is also about the expectations and philosophy. We really appreciate that we managed to attract CEP Invest Private Equity as an investor and ACEMA Credit Czech, a.s. as our strategic partner because they profess the same values. They helped us develop and also expand to foreign markets and we are very grateful for such an opportunity.  Another challenge was to find right people because here at Bondster we believe that the strength of a company is in its people.

I know that Bondster attracts investors from the whole EU. But you also have loans in CZK currency appealing to local investors in the Czech Republic. Do you observe any difference in the investment approach/attitude of Czech investors compared to other nationals?

Well, Czech investors are generally more careful, they start with small amount to test the platform and its operation. Investors from Western Europe usually invest higher amounts from the very beginning.

What are your next plans? Can you share some interesting developments that are currently in the making?

We are now preparing in cooperation with one of our European providers a limited offer of loans for 15 %. This will be launched at the end of April [April 30th]. We are also preparing new features for autoinvest and new settings of filters. The long-term goal is to launch our own mobile app for investing. During summer we would also like to launch the currency conversion for investors as we have a growing number of investors from countries outside Euro zone and we want to give them an opportunity to easily convert money through our platform. And as I said before, we would like to continue working on new providers outside EU to offer enough diversification possibilities.

Where do you see Bondster in 3 years?

Our goal is to have 20,000 investors, 60 providers and EUR 80 million of loans on the platform in three years. We would like to top up with our competitors and maybe even overcome them. It would be great if we would manage to become one of the 5 best P2P platforms in Europe. We will work on simplifying our services and innovating our platform and IT solutions to serve the best to our investors.

P2P-Banking.com thanks Jana Mücková for the interview.

Jana is a Relationship Manager, she manages an international team responsible for acquisition of new providers. She studied at two prestigious Asian universities and previously gained working experience in banking and export support. She is also a leading economist of Bondster.

 

Auxmoney Expands Into SME Loans

Auxmoney lgoAuxmoney, the largest German p2p lending marketplace, today starts financing SME loans. In the past Auxmoney focused on consumer loans of up to 50,000 EUR. Now loan amounts will get much bigger. Auxmoney will finance SME loans from 10,000 to 750,000 EUR at APRs between 2.7% and 11.9% depending on credit rating. Available loan terms range from 6 to 60 month. Applying companies will have to submit accounts and a list of otstanding debts. Unlike most banks Auxmoney says it will not require a director’s guarantee.

Under German law (KWG) a transaction bank is required to formally originate the loan. For the SME loans Auxmoney will cooperate with Solarisbank while continuing to use SWK Bank for the consumer loans.

In 2018 Auxmoney financed 551M EUR in consumer loans, which were funded by both retail and institutional investors.

SME loans have not been an easy market for German p2p marketplaces in the past. Lendico was bought by ING Bank and in my view the growth figures of Funding Circle Germany (which came into existence by Funding Circle buying Zencap) are far from impressive so far.

Auxmoney operated at a loss of 5.5M EUR in 2017 (the latest year for which accounts have been published), but CEO Raffael Johnen says the company has reached break-even.

Johnen is confident that the platform technology and the amount of data available for credit scoring will give Auxmoney a competitive edge.

International P2P Lending Volumes March 2019

The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 582 million Euro. I track the development of p2p lending volumes 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 platforms.

Milestones achieved this month (total volume since launch):

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. UK investors can compare IFISA rates.

P2P Lending volume statistic March 2019
Table: P2P Lending Volumes in March 2019. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed: Continue reading

International P2P Lending Volumes February 2019

The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 531 million Euro. I track the development of p2p lending volumes 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 platforms.

This month I added Bondster (use Bondster Promotion Code 5506 to get 1% cashback).

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. UK investors can compare IFISA rates.

P2P Lending Volumes 02/2019
Table: P2P Lending Volumes in February 2019. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed: Continue reading

Auxmoney Now Stands for 0.5% of the Market of German Consumer Loans

German p2p lending marketplace Auxmoney announced that it has facilitated 551M EUR in consumer loans in the year 2018. Up 74% compared to 2017. Approximately 73,000 loans were financed. Figures published by the German Central Bank Bundesbank give the total volume of consumer loans in Germany in 2018 as 105.7 billion EUR (page 2, column 3). This figure does not include credit card debt and overdrafts. That would mean Auxmoney now stands for a market share of roughly 0.5% of the market.

CEO Raffael Johnen stated ‘While the major German banks are in crisis mode, the leading German fintechs are always setting new records, and with our continuously strong growth, we are the first p2p lending marketplace to catch up with medium-sized banks in Germany.’ (translated to English from the German original of the quote).

(Sources: Company press release, Finanz-Szene)

 

Why has the FCA Refused the Application of Mintos and has the Decision any Consequences?

The FCA, the Financial Conduct Authority, is the supervising regulatory body for p2p lending platforms in the UK. In Dec. 2018 it refused the application of Mintos or more precise of a separate legal entity within the Mintos group, established for operations within the UK.

The full notice of the FCA decision can be read here. Below I outline some of the aspects. I also reached out to the Mintos CEO, who kindly answered my questions on this matter.

Before we go into the details, I want to make it clear, that the FCA decision has no direct impact on the current operation of  Mintos platform, which is headquartered in Latvia.

Mintos Marketplace Limited applied for permission to conduct a specific regulated activity (“permission to operate an electronic system in relation to lending (Article 36H RAO)”).

Reading the FCA decision there are several points that led to the refusal:

a) the applying company does not currently meet the minimal funding requirements of 50K GBP as specified by the rules (paragraphs 49-50 of the notice)

b) the head office of the applying company is not currently in the UK (51-53)

c) the FCA has doubts that the Mintos business model will be adapted adaquately to comply with the UK regulation rules (paragraphs 29-33, 35-38, 40)

d) the FCA find Mintos wind-down plans are not specific enough (41-44)

e) the FCA is not satisfied with Mintos’ understanding of the UK rules (46-48)

The decision is interesting to read. Naturally it judges Mintos solely by the formal compliance regarding the UK rulebook. Any other non-UK marketplaces seeking FCA approval can certainly learn some things from this declined application. As I stated above, it does not have any consequences for the current operation of the Mintos marketplace. It only affects any potential plans Mintos had for the UK market.

That gets us to the more interesting point: why did Mintos strive to get FCA approval still in 2018 despite Brexit? I asked Martins Sulte, CEO of Mintos, and here are his answers:

1) What was the intention of Mintos to set up the seperate UK entity and apply for permission at the FCA. Was this related to offering IFISA products and possible tax advantages for UK investors?

The intention is to connect to our marketplace loan originators originating loans in GBP in the UK and offering those loans to investors from the UK. We believe that the UK can become a self-sustaining marketplace where local investors are able to fund loans originated locally in the UK.

2) Considering that the application was pursued still as recent as July 2018 (point 29), this is an interesting move in light of Brexit, with several UK fintechs going the other direction to secure a continued presence in the EU. Any comment?

We view the UK market as a separate market that has the UK specific regulatory environment when it comes to crowdlending. Our intention is to create a largely self-sustaining UK marketplace that serves both UK loan originators and UK investors. In that light uncertainty caused by Brexit plays less of a role. It is important to note that each and every country has their own approach to regulating crowdlending, which means that for instance having the FCA permissions for working in the UK would not really affect our operations in other countries, even in EU. Only when the European Commission’s proposal for a regulation on European crowdfunding services providers come into place we might see that licenses are passportable across the EU and then in that light, the Brexit certainly would more of a consideration. For now, we have to look at each country separately.

3) Is the announcement of the application for an e-money license a reaction to the upcoming decision by the FCA?

No. E-money licence and UK permissions are very different licenses.

4) Do you think that any of the assessments the FCA made, will be relevant for the Latvian regulator once the Latvian regulation is finalized?

I don’t think so. Each country has its own approach. The UK has a rather specific approach. When we talk about Latvian regulation we also have to take into account that it will cover only investors and loan originators in Latvia. Once the Latvian regulation is finalized we will still have to look at each country separately. Us having a necessary license in Latvia will play a little role when considering our operations in, for example, Mexico, South East Asia or Russia, or even in other countries of EU.

 

Martins added: ‘This was a formal Financial Conduct Authority (FCA) decision on Mintos’ application for operating in the United Kingdom submitted by the Mintos Marketplace Ltd (a separate legal entity within Mintos group that was established for operations in the UK). The application was submitted almost two years ago. In these two years, our business model has evolved, our team has expanded significantly and we have gained major business results on a European and global level that defined our position as a leader in the market of investments in loans. The application for necessary permissions to operate in the UK doesn’t affect our daily business and the future development of Mintos, and the rejection of the application is nothing that can, nor will, affect our business operations in other countries.

The UK has different and specific legislation, and the FCA notice serves us as valuable feedback for adjusting our processes and procedures to fit the UK specificities. At the moment, we are in no rush when it comes to entering the UK market, as we are all aware of the many uncertainties regarding the Brexit issue. Anyway, our growth and expansion goals are unwavering, and entering the UK market will remain in the scope of our interest. We will continue working with our legal and regulatory advisors and will take into account the FCA’s feedback when considering our next steps with respect to the UK.’

International P2P Lending Volumes January 2019

The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 581 million Euro. I track the development of p2p lending volumes 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 platforms.

Milestones achieved this month (total volume since launch):

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. UK investors can compare IFISA rates.

P2P Lending Statistic January 2019
Table: P2P Lending Volumes in January 2019. Source: own research

EDIT: Correction- I reported a wrong number for January for Swaper in the table above. The correct figure is 2.6M EUR.

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed: Continue reading

Bondora Website Now Available in 24 Language to Boost Pan-European Usage

Bondora logoBondora has announced that the p2p lending marketplace platform is now accessible in 24 European languages. Bondora says it already has more than 42,000 investors from 85+ countries worldwide, that have invested more than 150 million EUR in the consumer loans listed on the Bondora marketplace. Bondora gives investors the choice of different investment products: Bondora Go&Grow, Portfolio Manager, Portfolio Pro and API Investment.

The popular Go&Grow product carries a yield of 6.75% and offers high liquidity.

Now the Bondora website can be used in 24 languages ranging from Bulgarian to Swedish. Bondora says they have taken this step, because they want to open their doors to Europe and make the platform accessible for all. Investors feel much more comfortable using a site which is in their native language.

Map languages
Map of the local languages Bondora now supports

Want to start investing at Bondora now?

Use this link to sign up at Bondora, and the normal signup bonus will be doubled for you, meaning, if you invest, you get 10 EUR bonus that you can use for investing. This is a limited time special promotion (after which the signup bonus will be 5 EUR again).

International P2P Lending Volumes December 2018

The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 445 million Euro. I track the development of p2p lending volumes 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 platforms.

Milestones achieved this month (total volume since launch):

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. UK investors can compare IFISA rates.


Table: P2P Lending Volumes in December 2018. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed: Continue reading

Year-End Review of my Mintos Results in 2018 and Outlook for 2019

I started investing on the p2p lending marketplace Mintos in January 2015. Nearly 4 years have passed. Most of the time my strategy was buy-and-hold, that is I invested in loans with the intention to hold them till maturity. That’s also what I had been doing at the majority of other p2p lending platforms. In the beginning of the year I had a large chunk of high-interest, longer-term Mogo car loans, together with some mid/longer-term loans of other originators on Mintos. After many of the Mogo loans were bought back in summer I decided to switch to a completly different strategy on Mintos. Thereafter I concentrated on trading, that is buying loans on the secondary market and selling them at a higher price on the secondary market again, usually holding these loans only for a short time frame.

When Mintos introduced the Secondary Market Autoinvest Feature in October my strategy got a boost.

So how did it go?

Mintos Account Statement
Summary of my account statement for 4th quarter 2018 – click on image for larger view

As you can see in the screenshot above I made 712.80 EUR profit from trading (buying and selling) loans in the fourth quarter. Compare that to the 127.14 EUR (101.74+25.40) interest earned. Obviously trading has been much more profitable. I consider it not much riskier than my previous buy and hold strategy as I was able to maintain a reasonable level of diversification over several investors. But of course investing on Mintos is high risk anyway.

Which loans did I select for trading?

It all comes down to buying cheap and selling at a higher price. My experience is that this works best with mid-term, EUR BB loans. With short term or very long term loans the impact of premiums und discount is to high / to low on the YTM for a good turn-around of inventory.

Below is a snapshot of the loans currently in my Mintos portfolio today – of course the composition changes very frequently with this strategy. It can be observed that loan ranges between 18 and 42 months dominate my portfolio, which consists of 478 indiviudal loan parts. Also loans with 13% and higher interest rates are overweighted.

Mintos Account Statement

This trading strategy worked very well for me in the past quarter. It would probably not scale, if an investor tried to deploy much more capital, as loan supply that matches my criteria for buying is limited and competition is increasing.

The Net Annual Return (NAR value) Mintos displays for my return has been constantly increasing this quarter and today is at 14.74%. Remember this is calculated for the whole time since I started investing, so since January 2015. If I would calculate this figure only for this quarter results, it would be much higher.

Net annual return Mintos
Screenshot Dec. 28th, 2018

So what to expect in 2019?

Interest rates on Mintos have been fluctating over the past years. In the last months they have risen considerably. Possibly a seasonal effect. I have no idea whether they can rise a little further still, or have peaked and will fluctate back in the other direction for a few month. Also the economic cycle might turn.

I will stick to my buying and selling strategy for now and for this strategy supply and demand on the secondary market is much more important than whether the interest rates are 1 or 2% higher or lower as most of my result is generated from secondary market gains rather than interest earned.

Also I am acutely aware of the risk that the huge number of originators pose. Even if Mintos does a good job of vetting and monitoring the originators, the sheer number of originators statistically means that chances that one of them might get into financial trouble are not neglectabe. For indivual investors the only viable measure to have some protection (and to reduce losses in that case) is diversification across several originators.

I do hope that 2019 will be a very profitable year for Mintos investors!

New investors signing up via this link on Mintos, get 1% cashbark on all investments they make in the first 90 days after registration.