Fellow Finance has opened up its services to European Investors
Investors with a bank account within European Union (EU) or Single Euro Payments Area (SEPA) are now able to invest in Finnish consumer loans through Fellow Finance, the Finnish peer-to-peer lending platform. Investments through the platform are being touted as highly lucrative – with an average annual yield of 13% for portfolios diversified across 100 loans or more.
The determination of borrowers’ creditworthiness stands out as a critical issue. Fellow Finance uses internal and external data points and marks each accepted loan with a rating score from 1 to 5. This Funding Circle-like ratings model has proven popular amongst the platform’s investors, who wish to shape their portfolios according to their risk aversion. Fellow Finance tells us opening an account is free of charge and losses are capped to 30% of the capital, meaning that investors will get back 70% of their principal on non-performing loans.
Fellow Finance CEO Mr Jouni Hintikka believes that this is a great opportunity for international investors to gain access to an extremely high-yielding asset class, and to diversify their existing portfolios. He commented:
”Our platform has gained thousands of investors in a short period of time in Finland and we are delighted to be able to offer our platform also for European investors. I believe our platform is very competitive in p2p lending space and offers a great opportunity for investors to invest in a high-performing asset class with a steady cash flow and very little volatility”
Fellow Finance has developed a secondary market in order to allow investors to trade loans from other investors. Real-time quote prices are provided in order to guarantee a flexible and reliable service, enabling investors to withdraw their investments quickly if need be.
The platform is pitching itself as attractive not only to investors, in terms of returns, risks and liquidity, but also for borrowers. Indeed, borrowers have access to a wide range of options, including borrowing from 500€ up to 10000€ and choosing a loan term tailored to their needs, just to name a few.
The platform has just opened to European investors and not yet to borrowers, but it is likely that the latter group will be able to draw funds from the Finnish platform sooner or later.
Jouni Hintikka concluded:
“The next step will be to open the cross-border borrower side of the service so that borrowers across Europe can start using our platform.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.