P2P Lending Site Isepankur Improves Loan Quality

Estonian p2p lending service isePankur successfully improved the loan quality in 2010. The company added several validation steps for loan applications. On top of the existing credit bureau checks and it’s own scoring model isePankur introduced several manual checks on the borrowers in May and July. Since September borrowers need to submit bank statements which isePankur uses to verify information presented in the loan application. The measures implemented are listed in detail here.

CEO Pärtel Tomberg told P2P-Banking.com: “…  these [new] loans will … be the most profitable social banking loans for investors across the globe”.

To prove this claim Isepankur is publishing real time performance data on its marketplace.

(See Isepankur site for larger size interactive charts)

Unlike other companies you can see the quality of loans per month so the growth rate of the portfolio will not hide the actual returns from loans issued previously.‘ says Pärtel Tomberg.

The charts reflect the drastic reduction of bad debt from loans issued after May 2010 and the very positive impact on lender returns. Continue reading

Sobralaen renamed Isepankur

Only 6 weeks after the launch, Estonian p2p lending service Sobralaen.ee was renamed into IsePankur.ee (translates to iBanker). The reasons were that “The previous name only represented one side of the business (borrowing) and [that] it had negative associations with payday loan companies who have destroyed the term ‘loan’ in Estonia over the past 2-3 years”, co-founder Pärtel Tomberg told P2P-Banking.com.

Since the launch 44 loans with a value of 81,200 EEK (approx. 7,000 US$) were founded. The current average interest rate is 25.3% which matches bank interest rates for similar loans.

Following requests by lenders, Isepankur allows borrowers to reveal their identity (full name and personal identity code) in their auctions. Clicking on the name or the identity code runs an automatic query at Google.

Sobralaen brings p2p lending to Estonia

Today Sobralaen.ee, the first Estonian p2p lending service, has launched.

Sõbralaen’s borrowers fill in a loan application for up to 15,000 EEK (approx. 1,200 US$), specify the loan length (up to 2 years), maximum interest rate and sign the loan application. This application will start an auction, during which Sõbralaen’s investors can bid for the right to invest in that loan. When making a bid, Sõbralaen’s investors specify how much they are willing to invest and how high interest rate they are looking to earn. The investment amount can be between 100 and 15,000 EEK. Before making the investment, the investors can see the borrower’s credit score, history of previous Sõbralaen transactions and also personal details. Investors also have the possibility to ask various questions from the borrower. In the end of the auction, the system will automatically pick the best bids and combine them into one loan. Sõbralaen’s system will thereafter manage the rest of the loan process from the payment of loan to debt collection.

Estonians are fast in adapting new internet technologies. This is reflected in the process of Sobralaen’s sign-up, too. Users identification is done at the moment of sign-up electronically. This is possible, because users can only sign up using a government issued ID-card (currently 80% of Estonians had an active ID card – but only 20% make use of its functionalities so far) and a smart card reader or Mobile-ID. Furthermore banking transactions and court documents are signed with digital signatures.

Sobralaen was founded by Pärtel Tomberg, Mikhel Tasa and Martin Rask.
I was invited to test-drive the platform in summer 2008 while it was still under development. The usability was good and I liked the detailed FAQs that explained everything to the point.

Continue reading