By Guglielmo de Stefano on Thursday 19 November 2015
AltFi caught up with Maurizio Sella, Founder and Chairman of Smartika, to find more about his business and the P2P lending space in Italy.
It's no secret that the Italian P2P lending space is not as well developed as other European countries, but that also means that the potential for growth is potentially much bigger. At least that’s what Maurizio Sella, Founder and Chairman of Smartika, thinks.
Founded in 2012, Smartika is the largest P2P lender in Italy and it operates as a licensed and fully regulated payment institution. I caught up with Maurizio who provided me with more colour about Smartika and the current state of the Italian P2P lending industry.
Smartika was actually founded in 2008, as a franchisee of Zopa, called “Zopa Italia”. After a successful start, the Bank of Italy adopted a conservative approach and shut down the business in July 2009, just 18 months after its launch. According to Maurizio, regulators were scared about this new phenomenon and the business was not fully understood. Finally, the European Directive 2009/110/CE changed regulators minds and Zopa Italia came back into existence in 2012, with a new licence and a new name: Smartika.
“We probably arrived in Italy (2008) too early when the p2p lending industry was not yet well understood by banks and institutions. Fortunately, after 2 years, policymakers found the best way to regulate the space and we came back as a fully licensed payment institution and with a new name in 2012.”
Maurizio now thinks that the regulatory change has opened up a big market that is chronically underserved. The Italian consumer credit market is worth approximately €46 billion, of which €25 billion are represented by personal loans. Only approximately 5% of them (€1.3 billion) are loans researched and purchased online and that’s Smartika’s initial target market.
Smartika is leading the Italian market with over 4,009 loans granted to individuals for approximately €21 million, lent by 5,718 lenders. The total loans to be still valued are 517 for a value estimated around €3 million. People might lend from a minimum of €100 to a maximum of €50,000 and their expected gross return would be approximately 6.5% - based on an average of the last 12 months. Money is not lent to a single borrower, but to 50 different borrowers, with minimum tranches of €10, to guarantee that risks are efficiently spread.
When asked how Smartika will face the foreseeable future, Maurizio answered that the company expects to underwrite more than 100 million loans per annum within 2-3 years. The reason for this expected exponential growth is due to the high potential of the Italian P2P market to grow in the near future. Indeed, 95% of the Italian total consumer credit market is still served by traditional institutions and the higher future penetration of the internet will presumably increase that percentage.
“With approximately €21 million of loans granted, Smartika is literally leading the P2P lending space in Italy. However, the Italian numbers aren’t really significant yet, if compared to other European countries. Italy counts 60 million people and a personal loan market of €25 billion. Of this amount, just 5% are purchased online - Smartika's initial target market - and therefore I see a high potential of growth in the near future.”
Maurizio concludes with a note on regulation, with policy makers again a potential threat. The platform is regulated by the law 11/2010 and according to Smartika’s boss, the burden of this regulatory framework is extremely heavy. The Italian platform is subject to strict audits and reporting requirements, and to mandatory daily accounts reconciliation. In addition, clients’ money is legally protected from creditors in segregated accounts in order to protect clients in case of platform failure.
Although these rules are really demanding, Maurizio concedes that the Italian regulatory framework offers excellent investor protection and enhances the confidence and trust of the general public towards the industry. At least, with the present regulation, platform’s failures (echoes of Trustbuddy) seem to be averted.