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Ibancar is part of iuvo since June 2019. The company is one of the leaders in the market of nonbank personal loans in Spain. Since 2014 our partners successfully develop their business, and its success comes from the innovative product, good understanding of the loan market and risk management.
Alexander Melis – CEO of Ibancar, shares useful tips for your receivables, what is the future of the P2P industry, and more about the business model of the company.
Tell us about the business model of your company?
Our business model is a hybrid. We have taken the “car title” lending model and made it as easy and accessible online as a payday loan. As a result of the collateral we can offer borrowers larger amounts for longer periods at lower expected annual return rates than payday loans.
Our underwriting model is based on the value of the collateral so we have very little credit risk and do not need the sophisticated algorithms that unsecured lenders use to make credit decisions. We have been operating for several years and have zero credit losses, the capital purchased in Ibancar loans is very safe and offers good returns.
How and why did you decide to join iuvo as an originator?
We are not big fans of the traditional financial markets (by that we mean banks) and wanted to continue funding our business in the alternative finance sector. That meant using P2P portals so we did extensive research and selected the best portals to offer Ibancar loans to users. This way we avoid becoming dependent upon banks and remain free to compete with them.
What do you think distinguishes iuvo from other players on the market? What are the main advantages of iuvo?
What we liked about iuvo was the care they took in structuring the product. We saw that, even though it was not necessarily a positive for the originator, the requirement to keep 30% “skin in the game” offers additional security to the user and that in turn ensures the originators on the portal are more solvent.
We also like the rating system for loan originators which is fair and well explained, we appreciate the fast response time from the technical team and the fact that settlements and cash transfers always happen as agreed and there are never any delays.
How would you compare your participation in iuvo with your experience with traditional receivable tools?
We like the idea of offering loans to private borrowers and then funding them with receivables from private users. The P2P market is direct and transparent with no manipulation and no unnecessary intermediaries. This allows originators like Ibancar to become portals, just like iuvo. The Ibancar portal delivers the borrowers and the iuvo portal delivers the users. We would never have been able to achieve this without the internet, smartphones, and social media. This is the future of consumer finance, and let’s face it, most people are happy not to rely on banks anymore.
How would you describe the experience you’ve had with the portal in 3 words?
Consistently above expectations.
What would you advise beginners who are currently considering purchasing of receivables in P2P loans?
I would say a few things:
1. Do at least some of your own due diligence, read the materials, purchaseigate the originators and make sure you are comfortable with their business model and that they are executing it competently.
2. Diversify – purchase in different originators but also different products and countries. Build a portfolio that considers risk and not just returns. Do not believe that the expected annual return rate offered necessarily reflects the risk so keep questioning everything. Keep the riskier receivables short and purchase for longer in the safer ones.
What do you think we need to improve in our work?
We would obviously like to see more and more users join Iuvo, and also it would be great to see more effort (like this interview) in promoting the originators as well as the portal. It helps users make informed decisions.
How do you picture a typical iuvo user?
We see the market changing and more institutional users using P2P portals so we hope the typical iuvo user will remain a hard-working individual using their own research to grow their savings. The people who use the portal are confident and make their own decisions, they prefer to trust their own judgement ahead of taking receivable advice from banks.
Can you forecast the future of P2P and the fintech industry?
We think the Euro P2P market will continue to grow but that there will be some difficulties along the way. Some originators will inevitably fail and only the approved and most diligent portals can survive such an event, so users have to remain aware and choose carefully where they purchase.
We also see expected annual return rates in the P2P market coming down and getting progressively closer to formal market levels simply because new users are discovering P2P purchasing of receivables, so there will be more demand from users than supply from originators.
We also think there will be further regulation in the EU to protect users, and that should be a good thing as any inefficient or over-leveraged operators will be taken out of the market. It will allow the “survival of the fittest”, which will make the market stronger and safer.
