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

My Finbee P2P Lending Portfolio after 8 Months

In August 2015 the new p2p lending marketplace Finbee launched in Lithuania. Finbee finances small unsecured consumer loans. The CEO told me that they meet all borrowers in person and that these are mostly looking to refinance other debts at higher rates, which they have paid in accordance to schedules punctually over months or years. Typical interest rates for investors are in the range of 20% to 32%. The platform is still very young, but recently loan volume picked up and Finbee crossed the milestone of 1M Euro loans financed since launch.

I started small and deposited only 50 Euro right after launch to test it and gain first hand experiences. Only two months ago I started depositing more and right now my deposited total amount is about 1,550 Euro.

The auction mechanism

Finbee lists all loan request and investors can bid either manually or via autoinvest (autolend). There is an auction period for each loan with investors underbidding each others in an reverse auction, meaning the interest rate will sink once the loan is filled. A pecularity of Finbee is, that each investor with a winning bid gets the individual interest rate he made the bid on, meaning there is no uniform lending rate for investors in the same loan (this is different from the way most other platforms handle reverse auctions, where usually all investors with winning bids get the same rate which is set at the highest winning rate at auction closing).

Finbee Loans
Loan requests at Finbee. The ones with the green button at right are open for bidding. Auction periods are initially set to 14 days but then reduced to 48 hours, once the loan is 100% filled by bids.

This auction mechanism often causes a mad rush in the last 5 minutes. Lots of bids are made right before closing and it is usual that the top closing interest rate drops 3-5% in these last minutes.

This is aided by a mechanism abbreviated ‘ARBU’ (Automated Response to Bumbed-off Underbids). Investors can enable ARBU to make lower bids on their behalf, once their original bid is outbid. The mechanism is quite configurable in selectable settings, but the catch is that it will not make more than 5 lower bids per loan. This led me to do quite a bid of configuring and experimenting with my settings. I also changed my strategy from multiple smaller bids on the same loan (e.g. 5 bids at 20 Euro), to now just 1 or 2 bids per loan at 30 to 35 Euro.

My strategy

In the first months I have just observed what is happening on the Finbee marketplace. Since February I go for the riskiest loans, risk category ‘D’ and sometimes ‘C’ with the highest loan amounts and the highest interest rates. I do all bids manually and have ARBU enabled with my settings, which I tweaked quite a bit. If I have multiple successful bids in one loan I try to sell some of the loan parts on the secondary market at premium in order to reduce the concentration. On the secondary market only current loans, that have made at least one repayment, can be sold. I also try to sell my late loans on the secondary market, but that means I have to wait for them to turn current again before I can sell them. Continue reading

Live Stream of the P2P lending Conference in Vilnius presented by Savy*

The first P2P lending platform in Lithuania, SAVY, is organizing their second annual P2P lending conference on the 23rd of March in Vilnius, Lithuania. Guest speakers from all over the world, including the co-founder of LendIt Conference Jason Jones and the leaders of the top Baltic P2P lending companies – Mintos, Bondora and SAVY, amongst others, will engage in a number of panel discussions and presentations.

The conference will be focused on the possibilities of P2P lending and Crowdfunding, while the participants will touch some important topics related to the prospects, challenges and trends for Alternative Financing on a global scale and in the Baltic region specifically, as it offers a considerably higher return on investments than most Western European countries.

Live stream of conference starting at 13:30 GMT+2 on March, 23rd

*Sponsored post: This post was paid for by Savy.lt, the conference organizer. I rarely publish sponsored posts, but in this case I thought the content is a very interesting fit for the blog audience.

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

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

Interview with Laimonas Noreika, CEO of Finbee

Laimonas Noreika is the CEO of Finbee, a p2p lending service that launched last week and is open to international investors starting today.

What is Finbee about?

FinBee is about borrowing for less and earning more when investing. We also are most user friendly p2p lending platform in Lithuania.

What are the three main advantages for investors?

Firstly, our loans have high interest rate – from 10 to 40 percent. That means, that investor can expect higher return of investment, compared to other p2p lending platforms. Secondly, we have reliable software, that is developed by UK based Madiston. That means, that it is tested and extremely user friendly from day one. And finally, we pay great attention to selection of borrowers, so that the risk for investors is minimized as much as possible. On top of that, we invest 10 percent on total sum into each and every loan, so we share the risk with investors. In the near future we also will introduce compensation fund that in an unlikely case of borrower defaulting on its loan will compensate lenders their investment.

What are the three main advantages for borrowers?

I would say that first and foremost, we offer cheaper loans than most of the players in Lithuanian market, including banks, payday loan companies and credit unions. This is achieved by implementing auction principle when borrowing. That means, that borrower can set interest rate ceiling, for example 15 percent. Lenders then are able to offer lower interest rate, therefore making loan interest rate for the borrower as little as 12 or 13 percent. This is free market at its finest, when the market sets the real interest rate for the benefit of the borrower. Secondly, we are very consumer friendly. We talk, look like and do our business like majority of our clients. We know, what they want and we are doing our best to meet those expectations. Lastly, we have a fair commission policy. That means that if borrower has high credit rating, our commission is lower.

What ROI can investors expect?

Laimonas NoreikaIt‘s all up to investors. Loan interest rate will be between 10 and 40 percent, therefore investors can decide for themselves if they want lower risk and lower potential ROI or higher risk with possibility of higher potential ROI.

How did you start Finbee? Is the company funded with venture capital?

FinBee started little over a year ago, when I quit my position as a CMO in one Lithuanian company and started everything from scratch: examining the market, getting know-how, attracting investors and partners, picking up experienced team members. Big breakthrough moment was when Madiston became our partner and we got a technological edge against our local competitors

Is the technical platform self-developed?

No, software is provided by Madiston, whose Tim Simon is also member of FinBee board. Tim has an extensive experience of delivering successful applications to the Financial Technology marketplace as a founder and CEO of Quotient plc and Mondas plc, listed on the London Stock Exchange and AIM respectively. Continue reading

Mintos Starts P2P Lending in Lithuania

MintosLatvia p2p lending marketplace Mintos announced today that it expands and now offers p2p loans – secured by cars as collateral to borrowers in Lithuania. This is the third country Mintos operates in after Latvia and Estonia. Mintos is open to international investors from Europe – the website states 1,200 registered investors from 26 countries.

The car loans in Lithuania are originated in cooperation with Mogo – a partner Mintos is already using in Estonia, where they together funded 250 car loans for a total of 300K EUR.

When investing in secured car loans investors enter in a direct contract with a borrower – similar to real estate backed loans the contract with respective borrower is transferred from Mogo to investor based on assignment. According to assignment agreement, part of the interest that borrowers pay is not assigned to investors and remains with Mogo to compensate it for loan origination and servicing. Continue reading