Despite of generating some poor press, p2p finance is still one of the hottest fields within the fintech landscape. A few weeks ago Commerzbank launched their own p2p marketplace Main Funders adressing Commerzbank customers. In 2015 Companies raised large venture rounds, investors found unicorns and there were even a couple of IPOs. And this trend will remain in 2016 according to techcrunch. In my latest Finterview Pärtel Tomberg CEO of Bondora – one of the earliest European p2p marketplace lenders and the first pan european lender -answered my questions
Please describe your company and product
Bondora is the first pan-European marketplace lender, serving borrowers in Spain, Finland and Estonia. Bondora was launched in 2009 and specializes in unsecured consumer loans. Today, around 15,000 retail investors are earning premium returns on the platform. Our customers include investors from every European country and as of September 2015 our platform is opened to accredited investors from the US, Canada, Mexico, Brazil, South Africa, India, Japan and Australia. Our customers have already invested over €58 million in loans issued by Bondora and received over €12 million in interest payments from us.
Why did you start your business?
I started the company during my undergraduate studies at Oxford Brookes University back in 2009 with a few people that were all living in different parts in Europe. We had a shared vision to make access to credit products easy for consumers and investors alike all across Europe. We saw that there was no reason to have country-specific banks instead of a single marketplace serving anyone regardless of their origin.
What customer problem will you solve? You’re main USP?
Bondora has over six years of data and track record available publicly since we launched in 2009, something that no other platform in the industry can demonstrate. We allow investors to start very small – with €5 – and invest either passively or very actively using our filters or API. There is no other platform in Europe that offers all of this data and functionality and we believe Bondora is the best choice for any investor starting out in peer-to-peer investments.
In short Bondora’s main USP-s are:
- We are the only cross border P2P lending platform that allows investors all across Europe to seamlessly diversify their investments across a number of geographies
- We are the only platform in Europe that has made all of its data publicly accessible
- We have an active Secondary Market for selling loans with discount or mark-up
- We are the highest returning platform in the marketplace lending industry verified by Liberum’s 2015 report
How is your startup financed? In what funding phase are you?
We are financed through revenue earned on a daily basis through our platform and additionally in February 2015 we secured Series A funding round of $5 million to boost our international expansion. The round was led by Valinor Management, a U.S. based investment firm that was also one of the early backers of Lending Club. Currently we are financially stable and not in the market for a new equity round.
Please describe your business model
We are taking the advantage of the inefficient credit markets and inoperative banking systems in the countries where we operate. For example, the average interest rate for a traditional bank issued consumer loan for a prime-equivalent borrower in Estonia is 20-26% – Bondora is capitalizing on such mispricing and due to that can offer its investors highly attractive returns. We do this by providing a seamless fully online user experience with fair, competitive and risk-adjusted prices through our proprietary bank-level credit analysis, scoring models and servicing.
Please tell us some facts about your team? Who are the founders and what are their skills?
Bondora’s team of 55 full-time employees from 10 nationalities is led by seasoned professionals with consumer marketing, investment banking, retail banking and asset management backgrounds.
Short answer: Disrupting banks or enabling banks?
Disrupting banks for their lack of innovation in the past 20 years and because after the last financial crisis banks are dealing with compliance instead of improving their services.
In what are you better than banks?
More and more people are searching online for the best deal for all their products and services from clothing to insurance and this also applies to loans and investment products. Bondora offers a user friendly application process done exclusively online, fast underwriting process and competitive interest rates compared to banks. Even though Bondora is competing with mainstream banks it is important to recognize that borrowers who choose Bondora are not people who cannot find finance elsewhere. Borrowers on Bondora are not different than banks customers and we as well collect information from the same sources as the banks, using a lot of alternative data sources for credit scoring and identification process.
What are the biggest future challenges for banks and for your company?
The biggest challenge for banks will be how to cope with the fact that every product within traditional banks’ offering, from current accounts to foreign exchange to lending and investment management, can now be purchased from an alternative fintech vendor. Those vendors are highly focused and efficient, which makes their services cheaper, faster and easier to use for the customer. Over the next decade, these changes will replace today’s universal banks with smaller, single product focused, service providers that are loosely coupled through different marketplaces. For us this is not a challenge, but an opportunity as we are improving a specific product and solving a unique need without having to worry about the legacy technology, regulatory burden in un-related services and conflicting incentives from other business lines.
Are you satisfied with the progress of your startup? Are you on target?
As with anything in life, there is always room for improvement. In general YES, I’m satisfied – today Bondora has a nice six-year track record, a recession-proof business model, great people onboard and an above average platform performance.
Any tips for people who likes to start a fintech startup?
Your team is everything.
What are your plans and milestones for 2016?
A major change that just came through was the launch of a completely new, separate investor website that 100% caters to the needs of the peer-to-peer investment community. We have a number of product updates coming out over the course of the coming months that will re-establish Bondora as the leader in online p2p lending. Later this year we’ll see the introduction of more traditional products and potentially in 2017 we will look at geographic expansions again. Right now the focus is on improved investor experience and returns.
What do you think about the problems of Lending Club? What went wrong and what consequences do you expect for the p2p lending landscape and Bondora?
It’s hard for me to comment internal issues as I’m from the outside but in my opinion the stated issue is too small for a CEO to step down considering Lending Club’s quarterly volumes. But as one’s misfortune is another’s opportunity we might see institutional investors look for other alternative platforms.