Compared to other European markets the Swiss p2p lendng market has been late in developing. Regulatory hurdles and an upper limit on interest rates for consumer loans of 10% (12% for card loans) have slowed development of the market. But it seems that real estate loans finally delivered a break through in 2019-2021.
According to the report there are currently 14 platforms active in the market:
Source: Marketplace Lending Report Switzerland 2022, p. 7
Several banks and insurances have taken stakes in platforms:
Funders is operated by the Luzerner Kantonalbank and licensed to other cantonal banks
The Lendico platform was acquired from PostFinance by Lend (Switzerlend AG) in 2019. PostFinance has acquired a stake of Lend in a reciprocal move.
Neocredit was launched in 2019 by French platform credit.fr and the insurance company Vaudoise. Since 2022, the Vaudoise Group has been the sole shareholder of neocredit.ch
In December 2021 the Basellandschaftliche Kantonalbank bought a stake in swisspeers AG as a strategic investor.
According to the report the p2p lending segment reached a record volume of 607 million CHF new loans in 2021 with a growth rate of 35.5% from 2020 to 2021. The largest share 418 million CHF went to real estate loans. The major driver were loans to companies in the real estate business. Many of these loans are issued as short-term credits to be later redeemed by banks.
Source: Marketplace Lending Report Switzerland 2022, p. 8
The study finds: ‘The COVID-19 crisis in 2020 has been one of the biggest crisis in Switzerland during the last decade. Despite increased default rates , the returns both in the consumer and the SME segment remained positive and recovered in 2021. The current situation remains challenging for the economy and financial markets, given the high inflation and rising interest rates’.
Source: Marketplace Lending Report Switzerland 2022, p. 11
The study has several conclusions, some of which are:
Rebound effect after COVID crisis: ‘Before the .. crisis returns … were high and risk – measured by default rates – low. The crisis was an important test, providing investors with a realistic risk and return profile of the asset class‘
Changing interest rate environment is a test for online business models
Sustainability is increasingly becoming a topic in the debt market
More transparency, more relevance: ‘… Increased relevance will require more transparency in the market … for institutional and private investors‘
Hive5* is a P2P marketplace that offers European investors to invest in group-owned loan originators. The first loan originator on the platform is Ekspres Pozyczka which facilitates short-term payday loans in Poland and business loans directly to the loan originator itself. Soon there will be more opportunities on the way: consumer loans from other European geographies, also different types of business loans – BNPL loans, green loans, estate loans and venture loans.
Why is Hive5 working with fully owned loan originators preferable versus working with external loan originators?
Key reasons why owned LO’s are way more secure than externals:
Team of carefully pre-selected top rank and impeccable reputation professional management only.
Corporate governance and complete transparency in front of shareholders, investors and regulators. Full access to regular performance monitoring, business planning and reporting.
Control over risk appetite. Our polish Loan originator uses a fully automated risk decision engine backed with advanced self-learning analytics performed over the big data pool generated from a comprehensive list of integrations. This solution eliminates the fraud, and human factor and enables us to plan and control acceptable credit risk levels.
Build and manage significantly increased group equity reserves since owned loan originators contribute the most significant share in returns on investment.
Investors can choose between several p2p lending platforms. Why should they invest in Hive5 rather than any of your competitors? Is there a USP?
Value proposal for investors:
Higher investment ROI. Until 17-10-2022, the interest rates are increased by +1%.
Buyback guarantee and skin in the game. Firstly, our Loan originator is obliged to Buyback the loan no later than 60 days after the loan payment due date, even if the loan is late or even if the end-borrower did not repay the loan to the lender. Both loan principal and accrued interest shall be repaid in full. Secondly, all our Hive finance group entities have a corporate policy to allocate at least 10% of equity into the provision funds, which shall be used as a buffer to secure our investors’ funds in case our Loan originator faces some financial difficulties.
Polish consumer loans. The biggest consumer market in Europe with a stable and growing economy.
What is the background of the team?
Team of professionals only. Secondly, by saying, “we have a team of professionals”, we mean it. For instance, Head of Operations Inga Zubanov? and Head of Marketing and Communications Karolina Staugait? worked at the second largest P2P platform in the EU. Alexey Kalevich, The Chief Technology Officer, worked at an international group of financial companies. Regarding our first loan originator, “Ekspres Pozyczka “, – all the team members have great expertise in top finance companies. For example, before “Ekspres Pozyczka”, CEO Wojtek Homan was an executive at “Provident Finance”. We love what we do.
You are planning to expand the lending operations into different markets. Which are these, and what criteria do you apply to select these markets?
Diversification and global scale
Finally, as every educated investor knows, the necessity of diversification; soon, investors could experience broad diversification on one platform by investing in many different types of loans. Thus, we will relentlessly diversify within two mainstreams:
1) Geographic: “hive5” will phase its expansion into three continents: Europe, Africa and Asia.
2) Products: we have launched the platform by allowing investors to choose from consumer and business loans. That is only the beginning; soon enough, we will introduce many more secured business lending products, such as Green (or sustainable) loans, Equipment leasing, Sustainable Estate loans and BNPL powered by e-commerce.
Our target EU countries with at least 10 million inhabitants.
The p2p lending platform is currently registered in Croatia. How do you see the regulatory aspects of the way forward?
The next step in our licensing roadmap is to receive updated and clearly defined ECSP regulatory framework guidelines, which the European Commission shall announce in November this year. Based on those guidelines, we will start application preparation for the single licence “passporting” procedure allowing the provision of crowdfunding services in the European Union and European Economic Area (EU/EAA).
We will keep you and all our investors constantly updated on this matter, as we consider it a solid extra mile of trust in front of our investors.
What’s your view on the economic outlook in Europe, especially regarding the countries your loan originators operate in?
In contrast to other EU countries, the economic outlook of 38 million populated Poland looks much brighter from a consumer lending perspective, even in these high inflation times. Firstly, Poland is one of the largest and fastest-growing EU economies with constantly rising purchasing power per capita. This means that before entering a turbulent economic cycle, this country and its consumers have accumulated much more buffer to absorb the downturns than the others. On top, very shortly, we will see traditional banks getting even more conservative against their current customers, which will instantly build an extra market of former prime customers. Needless to say, war refugees from neighbouring Ukraine instantly fill in the gaps in the workforce and contribute to local consumption. For us, the following months mean a heavy focus on controlling default rates when using our precision scoring engine; in simple words – more population to be scored before credit approval with adjusted risk tolerance levels.
What plans are on Hive5’s roadmap for the next six months?
Main KPI of Hive5* – at least 1000 active investors and 3 million EUR of the total loan portfolio by the end of this year.
Also, we will keep the promise to offer diversification on our platform. By now, investors can invest in consumer and business loans from Poland. Soon there will be more opportunities on the way: consumer loans from other European geographies, also different types of business loans – green loans, estate loans, BNPL and venture loans.
To make our platform stand out from a UX/UI perspective, we plan to implement more advanced and user-friendly features in the marketplace.
The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Peerberry* and Assetz Capital*,. The total volume for the reported companies in the table adds up to 297 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 Hive5.
Table: P2P Lending Volumes in September 2022. Source: own research Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.
The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Peerberry* and Estateguru*. The total volume for the reported companies in the table adds up to 213 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.
Table: P2P Lending Volumes in August 2022. Source: own research Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.
Can you please give a short introduction on iuvo’s offering?
Over the past year iuvo* has been developing quite nicely, launching a new product and closing 2021 with fantastic results. A high-level overview of 2021 can be found in our blog – https://www.iuvo-group.com/de/iuvo-in-2021/. This year started strong and then the Russo-Ukrainian conflict began and changed the game for everyone. Thanks to the outstanding work done by our experienced account managers, we assured our investors in the stability of the platform and not even in a single month did we end up net negative in terms of investments on the platform. In spite of the difficult situation, we managed to onboard 5 new loan originators thus increasing the investment opportunities for our investors. They are offering a nice diversification for our investors both within the Management Financial Group (MFG) and outside. The new loan originators entered the market with high interest rates and pushed the entire market to raise their interest rates in the 9 – 12% interest rate margins. To top it all, we rebranded iuvoUP to iuvoSave – thus making it the simplified product with the highest return currently on the entire P2P market. IuvoSave is very attractive because it offers 3 different investment periods with the shortest one being 3 months and the longest – 12 months. Also in the 6 months and the 12 month product you can invest up to 1 000 000 EURO, which is also unprecedented on the market.
I understand iuvo has a new management team. Can you please introduce the team and their background?
You are absolutely correct. Iuvo always had ambitious plans and will be aiming to continue down the road of success with a new CEO, and completely new marketing and IT development strategies. Blagovest Karadzhov started as CEO in the beginning of March (you can find out more about him in our blog Intro – https://www.iuvo-group.com/de/blagovest-karadzhov-takes-over-the-management-of-iuvo/ Interview with our CEO- https://www.iuvo-group.com/de/interview-blagovest-karadzhov-ceo-of-iuvo/ ) Our marketing strategy is aiming at drastically increasing the number of investors on the platform with different activities. It is also critical for us to increase the brand awareness of the company among the non-savvy investors. It is a tough task, but we are certain that the entire p2p ecosystem will benefit. In terms of technical development, we are aiming at some groundbreaking innovations in the P2P marketplace and we hope we will achieve them by the middle of 2023 and investors will feel them even as early as Q1 of 2023. Of course, all our endeavors are backed by MFG, part of which is iuvo.
Has the new management made any changes to the strategy of iuvo or do you continue the path as before?
As I mentioned we have revised our marketing and IT strategies to allow for rapid growth of the client base on the platform and to even better match investor expectations. P2P will continue to be our core business and the business model will also remain the same. Nevertheless, the needs of the investors show that they are interested in diversifying their investment options and we are considering how to offer different investment options, both within and out of the P2P sector.
Recently iuvo announced that the legal seat of the company running the platform will be moved from Estonia to Bulgaria. Can you please explain the reasons for this move.
Well, in short, the reasons are pretty trivial, financial and legislative. Back in 2016 Estonia was a fruitful ground in which we could flourish and develop and we are thankful for all the years we managed the platform under the Estonian legislation. Currently it is financially and operationally wiser to move out of Estonia so that we can continue to provide the highest quality of investment opportunities and service to our investor while raising our efficiency. Through all these years, the headquarters of MFG have been in Sofia, and as part of this group of companies, we believe it is time to come back home. This will lead to considerable cost saving which will help us reach the goals mentioned previously in our conversation. It is critical to point out that iuvo will not change the way it operates and there will be no changes in the investors’ experience, or the loan originators’ business practices as a result of this move to Bulgaria.
What’s your view on the economic outlook in Europe, especially regarding the countries your loan originators operate in?
We are onboarding companies from Spain, Romania, and North Macedonia. All these countries have a stable standing in terms of credit risk without any major deviations. Company wise, all new loan originators are ongoing a very thorough due diligence process. Just as a very basic example – even at the start, we start with an NDA and a verification if the person signing the NDA has actually the right to sign it and in the case of multiple owners, if they can sign individually or simultaneously, and we move forward only in the case when we have the right persons’ signature on the document. Only then do we move forward with the due diligence process, which usually if both teams are fully devoted and work in full speed will take on a month, while usually it takes around 3 months. Another example – with one of our loan originators, all the documents that needed to be signed in order to start the onboarding process, fitted in 5 boxes. Overall in Europe the inflation is rising and we are still to see how the governments will handle the winter and the rising inflation.
What plans are on iuvo’s roadmap for the near future?
Iuvo’s* roadmap is pretty straightforward – keeping the same business model without any changes, getting rid of all technical debts in the next 12 months, expanding in terms of loan originators and most importantly increasing the number of satisfied investors enjoying high levels of return on iuvo.
Estonian p2p lending marketplace Bondora* announced today that for new customers the availiable Go&Grow interest rate is 4%. They can invest an unlimited amount in the product called Go&Grow unlimited. The Go&Grow tier with an interest rate at 6.75% will remain available only to existing customers that joined before August 24th, 2022. Currently that tier is limited to adding 400 EUR new investment per customer per month.
Bondora says this change is necessary, since they will prioritize launching new loan markets, new financial products, and newtarget audiences in the coming months.
According to the announcement Bondora has 200000 customers, which invested more than 650 million EUR.