As a result of its on-going popularity, Monestro, a p2p platform is constantly approached by several media platforms to know its story. Recently a German channel, Business Talk on the Kudamm, interviewed Johan Orsingher who is the Chief Executive Officer of Monestro. The main theme of this interview is based on how Monestro rebuilt itself from years of experience and inspiration from competitors.
This blog is going to walk you through their conversation in a nutshell.
1. What is your business idea and what kind of investments is Monestro focusing on?
We are currently focusing on consumer loans. We allow private investors to invest in consumer loans which can be selected from different Loan Originators within the European economic areas. We allow people to start their investments as low as €10 to as high as €10,000 by a fraction which can be selected based on your risk appetite.
2. Monestro p2p platform was founded in 2016 and rebuilt in 2019, what were the lessons learned and the main changes that were made later?
To be accurate, Monestro was founded in 2014 and licensed by Financial Supervision Authority in 2016. The founders of Monestro designed a product which issued loans to the Estonian market which was to be financed by private investors. However, in 2019, they sold the company to “Plus Plus capital group” to explore a new pathway for P2P loans. Plus Plus Capital is the shareholder of Monestro. Since originally Monestro was limited to Estonian loans, which hindered its growth- Monestro then expanded its wings in all the European areas by “selecting” the Loan Originators and not by issuing direct loans. This required new submission to the financial supervision authority which took around 1.5 years. After careful work on the process, anti-money laundering and counter financial tourism and other factors which were key in the business, Monestro restarted its operations. The main lesson learned was that Monestro focused on the requirements of its investors. Some key factors such as security, profitability, short-term, mid-term or long-term loans were looked up in detail and the selection of Loan Originators was based on the investors’ preferences.
3. How do you guarantee the quality of offering on your marketplace?
Although nothing is guaranteed in this world, we work in-depth on identifying the best Loan Originators and we have a very effective and careful screening process for the LOs. We discard 2 of 3 LOs during the screening process. This process is based on the requirements, what we believe, the investors will like.
The process starts with a financial Due Diligence where the metrics of the company and its position.
Secondly, we look at the company’s process such as its mode of operation, credit issuance, selection of borrowers and follow-up on unpaid loans which is very crucial.
Thirdly and most importantly, we have a designated risk team who coordinates and follow-up with their team in order to ensure that they know how things are done in the financial market. We make sure that within the team, there are individuals that know the business.
And lastly, we ask our Loan originators to keep their skin in the game which is 20% of their own money so that in the case of a default, which is quite realistic in this business, the LOs are actually trying to recover their own money while running after the borrowers. On top of everything, we ask them to agree on the “buy-back” policy that after 60days the LO has to buy back from the investors with full principle and 60 days accrued interest.
4. What are your plans for the upcoming years?
We are growing quite rapidly but it doesn’t mean that we are rushing on growth. We are rather focused on controlled growth so that we really know what’s happening on the platform, what is the performance of the Loan Originators and how happy are our investors.
In terms of the upcoming features between 6 to 12 months, we are looking at the secondary market which is very important to liquefy the investment. For example, if you invest in Monestro today and you want to buy a new car by the end of the year, you won’t be able to have your money back before the loan maturity. So the secondary market gives you an opportunity to resell your investment in the secondary market.
Next, we are planning to expand our Loan Originators with products that will allow people to invest with less profitability, but the investments will be greener and sustainable. Sustainable finance will encourage people to diversify their investments.
Finally, we plan to increase our Loan Originator team. At the moment we have 5 Los in 4 different countries, however, we plan on spreading our wings geographically in order to decrease the geographical risk and increase diversity.
To watch the full interview, click on the link below: