Disclaimer: Please still do your own due diligence before investing in any P2P lending platform. I am just an investor trying to bring some value to the crowdlending community.
Date of interview: 06/02/2020
Interview with the Lead of Swaper Platform– Danija Misus
1 – What’s the value of Swaper in terms of investors, loans funded and actually interest paid to investors? Are there a lot of default loans?
Swaper platform currently has almost 4000 active investors and around 10 000 registered investors in total. Our total cumulative investments have reached 134 029 948 EUR and we have paid 1.7 million EUR interest to investors. We offer Buyback on all loans listed on the platform, meaning that in case the borrower is more than 30 days late with the short term loan repayment, the investor would receive the principal plus accrued interest for the whole period he has owned the loan. At the moment Buyback is offered after 30 days of delay of loan repayment, and Buyback rate varies from 15% until 20%, which means that around 15-20% of borrowers are late with loan repayment for 30 days. The rates vary depending on the seasonality and country, for example, if we put on platform more loans from Spain, the Buyback rate will be closer to 20%, simply because of cultural trends. As we have observed, for borrowers in Spain it’s quite normal to be late with repayment for more than a month. There is a statistics section on our website as well, where this information is updated monthly.
2 – What kind of due diligence does Wandoo Finance Group make before choosing a borrower?
Wandoo Finance Group takes due diligence very seriously as part of their responsibility to lenders and borrowers.
Since all loans are issued online, all borrowers are identified to avoid possible frauds. The identification system is different in each country, but all of them include identification document checks, identification using external specializes services, identification of payments, etc. After successful identification of a customer, simple linear scoring rules are used to evaluate customer’s credibility, depending on the country, if such data is available, income check is preconformed as well. The final decision is made by automated machine learning scoring models, that are using hundreds of data parameters and available information of credit history from external databases. Machine learning algorithms are improved constantly. The more historical data is used for their learning, the more precise it becomes.
It’s worth to mention, that Wandoo Finance Group has a very detailed debt collection process as well. If the borrower starts to delay repayment of the loan, at first Wandoo Finance is working with debtors by themselves by sending automated notifications (SMS/e-mails), making calls, sending letters to their physical address, informing borrowers relatives about debt, visiting customers at home. These actions are in accordance with specific country and legislation restrictions. If previously mentioned actions do not lead to the desired result, debtors the case is given to an external debt collection agency.
If the borrower still hasn’t repaid the loan, the case is given to the court. As already mentioned, the debt collection process is very detailed and precise, so even if the loan is not repaid by the borrower within 30 days from delay and it is brought back on the platform, it doesn’t mean that loan originator will not receive money back. The debt collection process continues long afterward.
3 – Have you shared all of the default loans so far? Can we see anywhere in your company’s website information about loans that didn’t go so well? I think this is important for investors too, i.e., to see transparency from your side.
No, we have not published general statistics about defaulted loans so far, but each investor has the possibility to analyze his portfolio, by checking account statement, where information about repaid and delayed loans are displayed.
Additionally, we are planning to update the Statistics section on our website and add there more information in order to be more transparent. First updates will be done already in the nearest weeks and more will follow.
4 – Are you doing something in order to accelerate the regulation of Crowdlending in Europe? How important is it for you?
We are constantly following all the regulation changes in Europe and in Baltics. From our point of view, common regulation would definitely help the whole P2P industry, not only the investors but the platforms itself, as it would reduce the possibility of the recent events that have happened.
As a platform we are strictly following the KYC and AML requirements, as well as taking care of a customer data security, but we see that not all the market players are doing the same, this is one more area where regulation would solve a lot of issues.
We are taking the personal data of our investors seriously, that is why we are making sure that all data is stored and processed according to the GDPR compliance. To be more precise – data is being stored in GCE ( Google Cloud Platform ) and being secured by 4-level security model:
- Datacenter physical security – only a small fraction of Google employees ever get to visit a GCP data center;
- Data encryption – all customers data being encrypted;
- Firewall – database can be accessed only by application from trusted sources and throw secured channels;
- Insider risk and intrusion detection – Google constantly monitors activities of all available devices in Google infrastructure for any suspicious activities.
We would like to add, that Swaper Platform operates in Estonia since August 2019. We decided to move the platform to Estonia because of Ministry of Finance in Estonia informed the market players of their plan to draft a new law on P2P models which are not already covered by existing legislation. The new law would not cover the models which will be regulated by the upcoming EU regulation of crowdfunding service providers compared to Latvia, where the regulator decided that P2P marketplaces should obtain Banking or Investment brokerage licenses and after long considerations, we decided to move the platform to Estonia because otherwise, we would have to change our business model significantly. But we are hoping that new regulation in Estonia will come soon, especially in the light of recent events.
5 – What’s your strategy to guarantee that things will continue to go as planned in the event of a world economic crisis? Wouldn’t the crowdlending sector be particularly affected?
The statistics during the crises, in any country where payday lenders are in the operation, shows that volumes are increasing, because more people are in need to borrow money. As scoring, used by Wandoo Finance, is automated, as soon as a lot of potentially “bad” customers would start to apply for loans, it would be recognized very quickly and the scoring would adapt automatically. We can’t comment regarding whole crowdlending and P2P industry, but in terms of the Swaper platform, in my opinion, I don’t see a lot of risks, the only thing that could happen is the decrease in interest rates, but we are trying not to change the conditions of the platform, since we have never changed the interest rates before. Worth to mention, that Wandoo Finance Group is working on launching its operations in other regions, so the influence in case of crisis would be more diversified because of that.
6 – Is Swaper profitable? Where can we follow the quarterly and/or annual reports?
At the moment we haven’t published any financial statements. Taking in notice all the recent events, we are fully aware that we must be as transparent as we can be. We intend to publish Swaper statements together with Wandoo Finance Group reports, it would give a much clearer picture for our current and future investors.
For now, the plan is to wait for the end of the audit for the year 2019 and then publish them all together.
To give you some general numbers about Swaper platform and as we already mentioned, it started its operations in October 2016, so the first full year for the platform operations was 2017. We finished the year 2017 with 237 939 EUR loss, however in the year 2018 our result already was 127 528 EUR net profit and according to unrevised data of the year 2019, the result is 361 998 EUR net profit.
7 – In the long run, would you like Swaper to be listed in the stock market? Why?
For sure, one of our goals is to become listed company in stock exchange. However, there are certain criteria and financials that the company must achieve in order to qualify for an initial public offering. Swaper is experiencing significant growth every year and is clearly preparing itself for that move. But at the moment it is too early to set a specific date for that.
8 – Do you have any plans to start or increase cooperation with loan originators from the richest countries in the world? Wouldn’t it be a great opportunity to jump to those markets? (ex: USA, Canada, Australia, England, Germany, etc…)
We are definitely ready to launch cooperation with loan originators outside EU. Actually, we have serious interest and we have had a detailed discussion with several loan originators across the world already. However, the obstacle is, that our banks mostly refuse to process transactions with loan originators and investors outside the EU. We are thoroughly studying the ways how to obtain Electronic Money Institution or full banking license that would allow us to cooperate with loan originators and investors all over the world. So at the moment, there is no definite answer to your question, but the most important thing is that we are actively working on it.
9 – What are the long term plans for Swaper? Do you have a vision for your company and would like to share it with us?
Last years have been very adventurous for us – we have reached several milestones, received few awards as the best P2P marketplace – that shows us that we are going in the right direction. For the next and upcoming years, we will definitely continue to focus on growing loan volumes on the marketplace by satisfying increasing investor demand. Our main plan is to introduce new loan originators from new countries that will be presented from Wandoo Finance Group on the platform in the nearest future.
In terms of the product, we’re planning to make some improvements to our Auto-Invest Portfolio in order to make investing even simpler and more understandable for investors, so they would be able to invest within just few clicks. We consider that our largest advantage in this market are our conditions – they have stayed the same since we started our operations – single rate, same loan originators as well as Loyalty Program for our individual investors, receiving +2% to their interest rate. Our main goal in this competitive market situation is and will be to provide the best product and conditions that we can for our investors.
10 – In your FAQ you mention that you accept any investors from the EEA Area. I heard that Polish users can’t register on the Swaper Platform. What’s the reason behind it since Poland also belongs to the EEA Area?
Yes, indeed, we do accept investors from EEA countries, however, when operating in specific country, we have to adjust not only to a legal environment, but technical peculiarities as well. At the moment we are not accepting investors from few countries within EEA, including Poland due to previously mentioned reasons. But we assure that we are actively working on that, and hopefully, we will be able to accept investors from Poland in the closest future.
My Thoughts on Swaper
Swaper seems to be heading in a different (but good) direction from other P2P platforms as is planning to enter in the stock market and expand their business to some of the wealthiest countries in the world. Would they be able to keep the same interest rates in those places? What about the risks? Who are those loan originators?
It makes me feel safer that for now, the company is profitable and it seems to keep growing their revenue.