The involvement of JEREMIE is a first for a peer-to-peer platform and is a major sign of support from the EU. As Mr Feranec explained, “JEREMIE is part of the European Regional Development Fund” and “was brought into the process through the Slovak Fund Manager Limerock, which has been selected by the European Investment Fund to manage a co-investment fund to support growth of Slovak SMEs.”
Being based in Slovakia, which, according to AltFi Data, makes up just 0.23% of the European market, Žltý Melón has significant work to do in educating the population. Mr Feranec provided some insight into the extent of public awareness around Eastern Europe:
“The level of public awareness towards peer-to-peer lending is certainly at a level as it was in Western-Europe some two to four years ago an still not known to the general public. Based on some recent articles in off-line press and media, we expect the topic to become more relevant in the near future. More investments and new players seem to foster this development.”
However, whilst many see the lack of public awareness as a problem, Mr Feranec points to the advantages that this affords Žltý Melón:
“For Žltý Melón the relative immaturity of the market was an advantage until so far, as we could develop our business model in a kind of “protected environment” with not too much buzz around it, neither positive nor negative. We could test the behaviour of borrowers and the appetite of investors for different types of products to build up experience and set the basis for our upcoming expansion.”
Despite this, for Žltý Melón to expand as it wants to over the next three to four years, an increase in market activity will be essential. When asked about the platform’s expansion plans, Mr Feranec remarked:
“[Our] clear priority is to scale up the business volume; the business model as such seems to work, based on our experience over the past two and a half years and now we need to make use of it by broadening the client base of borrowers and investors."
“We will do so in our home market Slovakia, where we are the first platform on the market. Furthermore, do we want to benefit from our in depth understanding and experience of lending markets in Central and Eastern Europe (CEE) and expand to neighbouring countries and become a true CEE-market place lending platform.”
Up to now, Žltý Melón has grown from Slovakia and spread into the Czech Republic. We asked the Žltý Melón management team why they decided to target this region:
“Czech Republic is a natural step for our internationalisation, as the credit market is comparable to Slovakia, cultural borders are limited and the market size is at least double of Slovakia. In addition, it will enable our investors for the first time to invest into different currencies (Euro and Czech Crowns).”
The talk of multiple countries and diversification sparks memories of a conversation AltFi recently had with Bondora and its international offerings. Certainly, Zlty is offering a more local service than that. In fact, Mr Ferenac emphasised that, whilst the platform will expand into other Eastern European economies, the focus will remain fixed on non-Euro countries and Zlty will only consider moving to Western Europe once a proven track record has been established:
“As we started in Slovakia, we have shown that we can manage to operate in an EU-country with Euro-currency and EBA regulations. Our strategic priority is currently to develop further in non-Euro CEE countries and look forward to develop our competitive advantage there. Western Europe and other markets globally might come into picture at a later stage, once we have shown we can manage more complex environments too.”
According to a recent AltFi Data report, growth in the European alternative finance market is strong, at around 100% in August. Žltý Melón, which boasts year to date growth of 123.55%, is part of this surge and amply represents the promise of Eastern Europe as an unexpected hub of peer-to-peer lending activity.