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.

 

Finbee Expands into Czech Market

finbee logoFinBee, a Lithuania based p2p lending platform, has started to expand internationally by launching in the Czech Republic. By 2020, FinBee plans to begin operations in another two European countries.

FinBee will provide personal lending services for residents of the Czech Republic as well as for investors from across the entire European Union. The company expects that during the first year of operation, 50M CZK (1.94M EUR ) will be distributed via the platform.

The Czech Republic’s business environment, as well as the possibility to launch with experienced local teams, were among the main reasons to launch in this Central European state, CEO of FinBee Laimonas Noreika said. Payday loan companies offering loans with high interest rates play a significant role in the Czech consumer lending market. Noreika emphasized that borrowers are looking for opportunities to refinance expensive loans.

“We are launching in the Czech Republic to provide competitive interest rates for Czech borrowers,” he said. “In other words, by borrowing for less and paying lower monthly instalments, customers will be able to repay expensive payday loans. We see a growth potential here.”

According to Noreika, one of the main challenges in the Czech market will be borrower credit risk evaluation. In the Czech Republic, there is no centralized credit rating agency or government-issued database for credit risk evaluation. Therefore, this needs to be manually extracted from several sources.

“Our historical interest rate of 21 percent, and our NPL rate of 4.9 percent are some of the best among European P2P platforms. We are very committed to maintaining these results. Therefore, solvent borrower selection will be our utmost priority in the Czech Republic.”

FinBee provides services to borrowers and investors in Lithuania and the Czech Republic. The company started operating in Lithuania in 2015.


Chart supplied by Finbee

I Started a Zlty Melon Test Portfolio

A few weeks ago I decided to start a small test portfolio investing in p2p loans at Zlty Melon. Zlty Melon is a p2p lending marketplace in Bratislava, Slovakia (see earlier articles about the Slovakian market). The marketplace lists loans to borrowers in Slovakia in Euro currency and to Czech borrowers in CZK. On the investor side Zlty Melon is open to residents of the European Economic Area. The website is available in English, Czech and Slovak languages.

I deposited 400 Euro via SEPA transfer. If you need currency conversion during a deposit, it might be cheaper to use Transferwise or Currencyfair than to do a direct bank transfer. Zlty Melon offers a range of loan types from unsecured consumer loans to ‘cashfree housing loans’ which the site describes as follows: ‘Loan to finance a new housing purchase. This loan is provided in cooperation with a well-known developer and is used to cover part of the purchase price of the property bought by the applicant. The real estate is being under construction.’.

I set up an autoinvest (called ‘Investment Manager’) to automatically bid 25 Euro on each new cashfree housing loans, as these seem the most secure loans and so far according to Zlty Melon’s statistics for this loan type there have not been any defaults. I set it up to invest in Slovak loans only as I didn’t want any currency risk. Maturity periods range from 1 to 5 years. For this loan type the interest rate is 5.9% p.a. and Zlty melon charges investors a fee of 0.33% on all installment payments. EDIT: Currently Zlty Melon runs a promotion for investors – if a large amount is invested in a single cashfree loan then investors can earn up to 1.1% bonus interest, making the total interest rate up to 7.0%. For unsecured consumer loans (which are graded AA to D- & HR) interest rates are much higher – up to 30-40% for HR loans – and the fee is 1%. Investors there engage in auction bidding against each other.


Screenshot: Excerpt of my Zltymelon dashboard

As I started only a few weeks ago, I don’t have that much experiences to share, only that the website is easy to use and offers a lot of information. With my selection criteria there is quite a bit of cash drag, as there are not that many new loans that match my filters. The total new loan volume (all loan types) that Zlty Melon originates each month is about 0.2 million EUR. Zlty Melon has a good comprehensive statistic page.

Zlty Melon does have a secondary market, but I have not used it.

While the interest rates on the loans I invest in are rather low, I like that the possibility to invest into Euro based p2p loans in a marketplace outside the Baltic area for diversification. I will see how my test portfolio develops and report on it periodically. Continue reading

Interview – Finbee the First Year

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

Impressions from the P2P Investing Day in Prague

Today I am in Prague at the P2P Investing Day organized by Symfonie Capital. There are several Central and Eastern European marketplaces present like Bondora, Finbee, Estateguru, Zlty Melon, Symcredit and Zonky, but also Lendinvest and Ablrate from the UK. The content of the panels and presentations was not as basic as in last year’s conference. I’d estimate about 150-200 attendees.

One interesting discussion centered on the differences between a bank loan and a p2p loan for a SME loan borrower that has problems to make the payments. One argument was that the advantage of a p2p lending marketplace is that it can be more flexible in finding a solution, e.g. by prolonging the loan term – having power of attorney granted by investors it is free to find a solution it deems right for the situation. The counterargument was that the platform should adhere to a rather strict set of rules since it owes its investors predicitability. Personally I understand both views but as an investor I prefer platforms to stick to a predefined process, because only that will make collections and defaults rates predictable. If there is too much flexibility and on the spot decisions it will be very hard to statistically evaluate platform performance and development for troubled loans over time.

One interesting anecdote was mentioned by Lucie Tvaruzkova, CEO of Zonky, a consumer loan marketplace in the Czech Republic, launched several month ago. She said that at the moment there is a waiting list of 7,000 investors wanting to use the platform but to scale it properly in line with loan demand, she lets those in only bit by bit. So far 5,000 investors are already active on the platform.

Symvest 2016 p2p lending conference
Panel on consumer focused platforms with representatives of Savelend, Bondora, Finbee and moderator Michael Sonenshine

David Bradley-Ward, CEO of Ablrate, told me that he expects to put more airplane loans on the platform in 2016 than in the previous year, but has to be selective in which loans fit the investor appetite. He also says the situation gets easier as he now has institutional investment in place that can pick up loan parts that would otherwise go unfunded by institutional investors.

I liked the panel that had 3 SMEs, that borrowerd through a p2p loan, on stage, as this gave an interesting change of perspective. Continue reading

Mintos Raises 2M from Skillion Ventures

Mintos LogoLatvian p2p lending marketplace Mintos has raised 2M EUR from VC Skillion Ventures in Riga. The p2p lending service was launched a year ago and lists loans from several loan originators. The loan types include mortgage loans, secured car loans, business loans, personal loans and invoices finance. The majority of the retail investors resides in Latvia, Germany and UK.The investors financed a cumulative loan volume of over 16M EUR since launch.

The loans are currently to borrowers in Latvia, Estonia, Lithuania and Georgia. Mintos CEO Martins Sulte plans to add loans in the markets of the Czech Republic and Poland next. Continue reading