Fellow Finance is a Finnish p2p investment platform, it offers investors the opportunity to invest in different types of p2p loans. Antoni Airikkala has answered the questions from InvestItIn.com
What is the basic investment proposition that FellowFinance is offering to investors?
Fellow Finance offer investors double-digit returns through investments in consumer loans, business loans and invoice financing in Finland and consumer loans in Poland. In Fellow Finance the investor can diversify his investments in different asset classes, risk classes, geographies and currencies.
Can you tell us more about FellowFinance? How many employees work there? Who are the major investors?
Fellow Finance employs currently 15 people in its offices in Helsinki and Turku. The major investors are retail investors even though we also serve institutional investors. We have investors from over 40 different countries.
Can you tell us more about any recent upgrades in your IT systems? What more will you do in the future?
We have put a lot of effort in enhancing the user experience simultaneously being aware of the fact that the automated functionalities are of essence for the majority of investors. We will continue improving the user experience, and user interfaces along with the geographical expansion and new product launches.
What is your key difference between other p2p lenders?
Liquid and well-functioning secondary market where investors can trade with their loan investments. We also are a true marketplace based on reverse auction system differentiating us thus from platforms who intermediate loan fractions of balance sheet lenders.
We also offer both consumers, business loans and invoice financing which enables investor to diversify across asset classes.
What is your version of buy back guarantee?
For Finnish consumer loans, we return investors 70% of the remaining loan capital on day 90 of loan being in arrears.
How is the loan risk calculated?
We use our internal credit scoring model based over 40 different variables. We verify the income information and use external databases to check the historical payment behaviour of the applicant. We give our clients a credit rating ranging from 1 to 5 stars.
Do you have any advice on how to setup the auto investor?
The easiest way is to use the default settings which set the required interest bid rates to market rate level which allows you to start getting returns right away. In order to maintain good capital velocity I currently would advise to set the maximum loan length to 84 months and always allow investments in 4 and 5-star loans.
Do you have any tips for investors using your secondary market?
Here the easiest approach is to use our ‘Sell Multiple Loans from Portfolio’ functionality. With the help of this feature you can select the loans you wish to sell and set the price depending on the payment history of the loan. The longer payment history the better secondary market price.
You have opened the platform to institutional investors via the API. What was the impact of this on interest rates and loan availability?
Correct. Not enormous. As the API investors are treated equally with the investors who use our loan allocator this has no impact on the auction operation.
What are the demand and supply dynamics on the website?
Our investor capital is growing steadily and we expand geographically and product-wise to meet the increasing demand.
What is the weakness of the buy back guarantee?
Some investor could argue that the overall returns would be higher if they decided whether to use the buyback guarantee or not. Currently opting out from buyback is not an option in our platform as most investors prefer to get the cash quicker back in action.
What are the key risks do you see in the p2p industry in the coming years?
The industry would profit enormously from a pan-European approach lending p2p-lending regulation and active involvement in the development of this regulation is of the essence for every platform.
Visit http://fellowfinance.fi/ to discover more about the investment opportunities they are offering.