This is a guest post by Pawee Jenweeranon, a graduate school student of the program for leading graduate schools – cross border legal institution design, Nagoya University, Japan. Pawee is a former legal officer of the Supreme Court of Thailand. His research interests include internet finance and patent law in the IT industry.
1. Introduction : The Peer-to-peer Lending Industry in Thailand
Peer-to-peer lending which also known as social lending or crowd lending has drastically increased in the recent years in many countries over the world. The volume of peer-to-peer lending activities also has been grown rapidly, for instance, the volume of peer-to-peer lending activities in U.K. has doubled every year in the last four years.
Peer-to-peer lending might be used in many ways if it is properly regulated by the responsible authorities, this is one of the reasons which lead to the issuance of the consultation paper to regulate peer-to-peer lending industry by the Bank of Thailand.
For instance, due to the current situation, poor people and SMEs in Thailand normally face difficulties in accessing finance from banks or traditional financial institutions[i]. This affects the increasing number of informal loans outside the financial institution system which are normally illegal, specifically; the problem of informal loans currently stood at more than 5 trillion baht and covered around 8 million households in Thailand[ii]. Continue reading →
Beehive is the first and only P2P financing platform in the UAE (United Arab Emirates). Otherwise known as marketplace lending, peer-to-peer finance is the practice of lending money to unrelated individuals, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution. Beehive bridges a significant funding gap that currently exists in the UAE market. Our platform applies the innovative technology of crowdfunding to eliminate the cost and complexity of conventional finance. Businesses bypass conventional intermediaries and receive financing directly from the crowd. This enables them to get faster access to lower cost finance, while investors get better returns. Beehive is a facilitator that enables businesses to secure the funding they need by creating the organizational framework and infrastructure required for community and financial support to materialize.
What are the three main advantages for investors?
The three main advantages for investors are:
No Barrier to Entry: Individual investors can invest from as little as AED 100 into each business listed on the platform and receive monthly repayments currently averaging 12% per annum with reinvested returns. Investors get money transferred into their account in as little as two days.
Diverse Portfolio: By investing on the Beehive platform, investors can diversify their risk across a number of products offered to a variety of companies operating across diverse sectors, with new companies listing on the platform every week. They are able to directly invest in a business they believe in. Investors are also able to buy or sell their finance parts to other investors on the platform through Beehive’s secondary market. This gives investors access to a market place where they can trade finance parts and allows greater access to liquidity and diversification.
Sharia Compliant Structure: Beehive allows investors to ethically invest in some of the most innovative SMEs in the UAE. Beehive supports Dubai’s ambition to be a Global Financial Capital with its innovative Sharia-compliant platform, which helps Islamic finance customers to achieve their financial goals in a more ethical structure, and helps compliant SMEs tap sources of Islamic finance liquidity. Beehive was certified by the Shariyah Review Bureau (SRB) as a Sharia-compliant P2P finance platform in September 2015, making it the first P2P platform in the world to independently confirm its processes are compliant with Sharia principles.
What are the three main advantages for borrowers?
The three main advantages for borrowers are:
Cost of finance: The platform offers considerable savings to businesses that need it: Businesses using Beehive save on average 30% on their financing costs. The average bank borrowing rate (unsecured) for SMEs in the UAE is over 18%, often much higher. Because investors compete for rates in a reverse auction process, business receive the lowest possible average rate from investors.
Time to finance: The Beehive online marketplace facilitates faster, more flexible funding, with companies typically getting a decision on their finance requests in 3 days. The application process is completed online, and businesses receive funding in 14 days or less.
Invoice Financing: Beehive’s SME invoice financing tool is designed to serve SMEs and help them manage their cashflows by closing the gap between the issue of an invoice and the receipt of actual payment. By unlocking the value of their accounts-receivable, they are able to tackle the dual challenges of rising inflation and late payments. These products give SMEs more options to plug invoice gaps, giving them greater control over their business and finances, and thus a greater opportunity for security and growth.
What ROI can investors expect?
The average return for investors is 12% per annum with reinvested returns
Please tell me more about Islamic Finance and Sharia Compliance. Is that a main factor for attracting clients?
One of the things we are very proud of is receiving our Sharia Certification. Globally we’re the first platform to be certified sharia compliant. It was our plan from the beginning to make a sharia P2P platform, because it hadn’t been done before and it would open a new asset class to Islamic investors. About 80-90% of businesses on the platform are Sharia compliant. What we find is that if the listing is sharia compliant, then investors will engage with the business whether they are conventional or Islamic, so it is a very attractive feature for both investors and businesses across the board.
How did you start Beehive? Is the company funded with venture capital?
Beehive has so far received two rounds of external funding in addition to founding investment.
Is the technical platform self-developed?
All the technology on the Beehive platform has been developed using in-house capabilities. Our in-house IT development, design and creative teams allow us to be agile and responsive to market needs. Continue reading →