Yet another intriguing P2P prospect has reared its head in Eastern Europe.
Mintos is an online marketplace for secured consumer loans – catering to borrowers in Latvia, Lithuania and Estonia. The loans themselves are backed by homes or cars, and are not dissimilar in size and term to say a Zopa or RateSetter loan. The advertised return is very different, at 13.3% average yield per annum to date.
Mintos is structured such that every loan is immediately funded off the company’s balance sheet. Each loan is then syndicated out to the platform’s private investor base – with Mintos always retaining a minimum 5% stake. The size of the stake held by Mintos in each loan varies depending on investor demand.
Martins Sulte, CEO of the platform, sees multiple benefits to this approach. Once approved, borrowers get the quick access to capital that they sorely need. And investors are able to start earning interest immediately because they don’t need to wait for the loans that they choose to partake in to close. And of course, for Mintos itself, pre-funding each loan is an effective method of ensuring early growth. That’s reflected in the €1.7m that the platform has lent since launching in January this year.
The Mintos platform has been carefully tailored to suit the needs of the P2P investor. Transparency of information has been a focal point. Primary market loans come attached with very clearly laid out, easily comparable data points (loan purpose, loan amount/balance, LTV, interest rate, term, etc.). The secondary market provides the exact same set of information for each loan – plus the “price/discount”. In terms of usability and functionality, the interface feels pretty seamless. The platform also features an auto-invest tool.
Another interesting addition on the transparency front is Mintos’ “Recent Activity” tab. This feature displays the most recent transactions – an insight that, if expanded upon a little, could prove serve as an invaluable comparative tool for investors.
“We built the platform having clear investor preferences in mind from the outset. Before plunging into specifications and active development we had been investing ourselves across many other platforms in continental Europe, UK and US. Basically, we built the platform that would function the way we, as investors, would like any platform to function. We implemented what we felt was best practice, and improved user experience where, in our opinion, the current platforms weren't working that well.
Consequently, from the very beginning Mintos has been offering what we believe are core features for investors such as Auto Invest, secondary market, detailed account statement, investment overview, recent activity tab, etc. We were and continue focusing on transparency and user experience that are integral in building trust with investors and also borrowers. For each loan investors are provided with information about the borrower, collateral, detailed payment schedule with payment history, investment breakdown, and obviously loan terms. Many investors have appreciated the intuitive user interface and general ease of use of the Mintos platform that translates to less time spent on managing investment portfolio.
We are delighted about the early trust showed by already more than 1,200 investors from 26 countries all across Europe that have registered at Mintos and have invested a total of more than EUR 1.2 million in more than 350 secured loans to consumers in Latvia and Estonia.”
As discussed, Mintos currently accepts borrowers from Latvia, Estonia and Lithuania. The platform’s investors hail from across the EU, as Martins mentions above. I asked Martins whether the platform had run into any regulatory barriers to cross-border investment. The answer was that whilst anti-money laundering checks, currency exchange issues and so on have to be accounted for, there’s nothing specific regulation-wise to prevent the facilitation of cross-border P2P investment.
But surely origination and due diligence processes in foreign geographies are a challenge?
Mintos’ answer to this issue has been to forge relationships with local partners. For example, the platform provides car loans in conjunction with an established auto-loans company by the name of MOGO – the largest non-bank car lender in the region. MOGO began life in 2012, has over 200 employees and has lent over €60m across a number of countries. Mogo takes responsibility for originating, due-diligencing and servicing auto-loans – some of which will then be transferred onto the Mintos platform for financing.
There are few early-stage European peer-to-peer lenders that aren’t actively weighing the possibility of continental expansion. Mintos is no exception. Martins tells me that further European expansion is on the cards. The land-grab in European peer-to-peer lending is really starting to heat up.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.