Interview with E. Remeikis at P2P-Banking.com
Read the interview here: https://www.p2p-banking.com/countries/baltic-interview-with-evaldas-remeikis-chairman-of-the-board-at-uab-neo-finance-marketplace-paskoluklubas/
What is Paskolu klubas about?
NEO Finance is the leading P2P lending platform Paskolu klubas in Lithuania. The platform is an intermediary for consumer loans connecting lenders directly to borrowers. We believe that fintech companies should not only be innovative, but also professional. This is why we have gathered a strong team of senior experts from the banking sector with expertise in consumer lending, bank management and risk control. Currently all NEO Finance activities are supervised by the Bank of Lithuania and we have obtained an e-money license, P2P license and have a consumer lender status to ensure that responsible lending criteria is enforced.
We have a unique platform that we developed ourselves to fit the needs of our investors. NEO Finance offers buyback and provision fund services which minimizes the risk for lenders. Moreover, in partnership with Legal Balance, UAB enables the platform’s users to experience the benefits of 7+ years of delinquent loans recovery know-how.
By transferring money to a Paskolu klubas account, investors deposit into an e-money IBAN account under their own name and hold all of the money under their control until the investment is made.
Our main goal is to ensure a sufficient supply of loans is listed in the primary market so that our investors can select the loans which suit their investment strategy.
What are the three main advantages for investors?
Provision fund service. By voluntarily paying a provision fund fee, more conservative investors can be secured from delinquent or defaulted loans. If a borrower is late with the installment, the provision fund immediately covers that installment. The fund holds the largest amount of proceeds to cover late payments in the Baltics and currently holds more than 100 000 EUR.
Buybacks. Investors who do not choose the provision fund service can sell defaulted investments to “Paskolu klubas” for 50-80% of its face value. Instead of waiting for a relatively long recovery process they can reinvest their money into other loans.
Higher interest rates of return. In Lithuania, we operate in a market of a higher interest rate. Currently, our average interest rates are as follows for each of the credit ratings: A – 13 % B – 17% C – 20%. This creates opportunity for investors from all over Europe to receive higher returns.
What are the three main advantages for borrowers?
Lower fees for borrowers. As our fees are one of the lowest for borrowers, a half of borrowers choose “Paskolu klubas” loan as an alternative to a bank loan.
Possibility to get an instant loan. Since we developed our in-house state-of-the-art IT platform ourselves, we can offer unique features for borrowers and investors. One of them is an instant loan service. Investors can set up their automatic investment tool and borrowers can see how much they can borrow at what rates, as the system collects all automatic investment orders starting with the lowest rate and building it up to meet the needs of a borrower. This feature enables investors to invest their capital faster.
No upfront fees. Unlike other platforms, Paskolu klubas does not charge an upfront fee to borrowers. Borrowers receive the exact amount they borrow. The platform fee is deducted from the payments, this way we take the risk together with investors and are able to offer borrowers flexible borrowing.
What ROI can investors expect?
10-18% after taxes. One investor did an experiment with an initial deposit of 4000 EUR. Half of the investments were made using a provision fund service, 5 defaulted investments were sold to NEO Finance and some investments were sold in the secondary market with a premium. ROI after exactly 1 year was 14% after taxes.
Is the technical platform self-developed?
Yes, this allows us to add various new features and to fit the needs of both investors and borrowers. We are not just a peer to peer platform, but also a fully licensed e-money institution. This enables us to operate as an online bank with IBAN account numbers and SEPA MMS payments.
Evaldas Remeikis. How is the company financed? Is it profitable?
The company is financed using shareholder’s equity. It is not yet profitable, but we have only been in operation for a year and a half. Our current goal is to increase market penetration and market share.
What were/are the main challenges in the Lithuanian market?
When preparing for the launch, we spent a lot of time carefully analyzing Lithuanian and foreign markets. “Paskolu klubas” shareholders and employees have a lot of experience in the financial sector, we also work with the best partners and agencies. This helped us to be prepared, therefore none of the challenges were unexpected.
One of the more significant challenges was financial literacy. Potential investors had never been introduced to peer to peer lending before. Therefore, we started an event and training cycle where we educate investors about pros and cons of peer to peer lending.
You launched the company for residents of Lithuania quite some time ago. What prompted you to open up for international investors and launch an English version of the website right now?
From our experience, we know that establishing a consumer loan brand in a market takes at least a year. We have focused our effort on becoming the number one platform in Lithuania for the past 18 months but from the beginning we had strategic plans to open our platform up to international investors. Currently we can supply enough quality loans for international investors.
Furthermore, it took time to acquire a full e-money license. For this we had to make sure we met international anti-money laundering requirements and international identification requirements. Now we have established processes, developed the system and met those international requirements, we are ready to offer the opportunity to international investors.
Which marketing channels do you use to attract investors and borrowers?
For investors, we mostly use educational channels where we try not only to advertise, but also to educate people about investment opportunities. In 2016 we organized over 30 events for our investors. We also have partnerships with different financing experts who can provide feedback on our platform and receive bonuses for the investors they bring in.
Moreover, word of mouth works perfectly for us because we have many satisfied investors who are sharing their experiences and helping us grow.
For the borrowers, we have a fully integrated marketing campaign. We use various traditional and digital channels. We invest in brand building and acquiring quality borrowers. This helps us to acquire valuable borrowers who are worth investing in.
Where do you see Paskoluklubas in 3 years?
We see Paskolu klubas as a global player in the P2P lending sector. We may establish borrowing sites in other countries, but we will localize them as we did with Paskolu klubas in Lithuania. We see advantages of having a strong brand in each country we operate in for borrowers. We are currently on a path of fast growth and we are not looking to slow it down. Our goal for the next few years is to be the number one platform for investors in the Baltic states.
Investors can use the Paskoluklubas referral code P2PBANKING when registering and get 10 Euros for their first investments.