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

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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 Å iauliu Bank in Lithuania. An American professional in commercial real estate development is also on our team. […] Continue reading →

Technological Revolutions and Financial Capital

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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

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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

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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 →

P2P Lending in Ireland

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This is a guest post by Derek Butler, CEO of GRID Finance

The Market

The peer to peer lending market remains small in the Republic of Ireland. Across all types of peer to peer finance (donation, equity, lending and donation) we estimate that the size of the market in Ireland in 2015 is a maximum of 50 million EUR. This is however growing quickly, particularly with the arrival of Kickstarter in 2014 to the Irish market. GRID Finance is one of two peer to peer lending platforms in the Irish market – both provide access to small business loans. There are currently no consumer focused peer to peer lending platforms in Ireland. GRID focuses on small business loans up to €75,000. Irish based peer to peer lending platforms are both an alternative and competitors to the Irish banks. In aggregate, 4 billion EUR in small business lending is secured by Irish SME’s (Small, Medium Enterprises) annually.

Small business lending in Ireland continues to be dominated by AIB and Bank of Ireland, the two ‘Pillar’ banks of the Irish banking system. These banks struggle to serve the small business lending market due to the cost of product delivery, credit risk profiles, regulatory challenges and legacy distressed debt issues in the sector.

ireland-flagThe Irish government has recently launched a platform investment fund, through the Irish Strategic Investment Fund, to support the development of platforms that originate loans online. This is another positive step in establishing the peer to peer lending market in Ireland.

Regulation

Peer to peer lending is not regulated in the Republic of Ireland. The Central Bank continue to monitor the space and are seeking a pan-European directive to regulate it. The recent announcement of the Action Plan for the Capital Markets Union has dispelled this as it outlines its reluctance to regulate the space at a Pan-European level while the industry is in its infancy. Local peer to peer lenders are seeking the Irish Government’s Department of Finance and The Central Bank of Ireland to support the development of the P2P lending space with a regulatory approach based on the UK’s FCA regime. The government’s strategy for the International Financial Services centre also calls for supporting Dublin as a premium location for Domestic and International Fintech start-up businesses. The introduction of a regulatory regime is key to building confidence and trust in this emerging sector and will act as a buffer from the arrival of weaker platforms into the market. Continue reading →

Lithuania Will Regulate P2P Lending Starting February 1st, 2016

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Lithuania will regulate p2p consumer lending starting February 1st, 2016.

The main requirements introduced by the new legislation in Lithuania are:

  • 40K Euro of share capital required by the marketplace company,
  • contingency plan in case of failure of the platform,
  • limitation of 500 Euro investment per one loan,
  • limitation of 5,000 Euros investment per platform for ‘inexperienced’ investors,
  • marketplaces will be allowed to gain their revenue only from monthly instalments paid by borrowers. This means that all platforms will not gain revenue if their portfolio is not performing.

Laimonas Noreika, CEO of Lithuanian p2p lending company Finbee told P2P-Banking.com: ‘Once again Lithuania proved itself as a country with strict financial regulation. [The] new law gives more transparency to all – lenders, platform owners and public authorities. FinBee welcomes the regulation and invites international lenders to discover Lithuania as a country open for P2P lending.‘ Continue reading →