Where are savings best applied?
Small Latvia is one of Europe’s largest Fintech markets. Two credit platforms are popular with German investors due to high returns.
In times of low-interest rates, investors are looking alternative investment opportunities that promise higher returns. One possibility is the so-called peer-to-peer lending. Here give individuals money to other private individuals or small businesses. This is done by classical financial institutions but on platforms on the Internet.
These alternative financial platforms belonging to the so-called “Fintechs” have grown significantly in recent years. This is one of the largest European markets include the UK, France, and Germany, surprisingly, the much smaller Latvia shows about a published last December study by the consulting firm KPMG. In the Peer-to-peer lending are the platforms Twino and Minto, who have won not only Latvian but to a large extent also German customers.
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The two-year-old credit platform Twino investors can invest in unsecured consumer loans, which awards Twino subsidiaries in Poland, Georgia, Denmark, Russia and Spain. “German investors have been more than 35 million euros invested in loans to our platform,” says Twino chief Jevgenijs Kazanins. This corresponds to a quarter of the money invested. 3000 German investors have registered with Twino, half of them in the past six months. On average they have invested 3,150 euros, the peak is 500,000 euros.
The minimum investment amount is 10 euro, but investors may also finance loans completely. Twino recommends investors the investment to be distributed to several loans to scatter the Riku. To protect investors Twino offers a payment and a buy-back guarantee. If the borrowers with payments in arrears, Twino necessary to meet the payments. repayment delayed for more than 30 days, Twino refunded the amount invested and lost interest. Although there are on Twino also loans without guarantees, most investors opt for the lesser risk: 98 percent of loans have a buy-back or a payment guarantee.
Twino chief Kazanins compares the investment in the platform with corporate bonds. The difference is that Twino investors received interest and principal monthly.
“Just as Amazon”
Slightly different is the business model of Minto. On the platform, various non-bank lenders are registered to offer the investors to invest in loans granted. These are too specialized lenders of auto, mortgage, and business loans, as well as factoring and short-term investment loans.
Minto’s CEO and co-founder Martin Suite compares the business model with the Internet retailer Amazon: Just as Amazon seller and buyer Minto bring investors and lenders together that provide loans to individuals and small businesses.