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What Can UK P2P Learn From Žltý Melón?

Fintnews: First of all, what does ŽLTÝ MELÓN do?

ŽLTÝ MELÓN: “We are a P2P platform connecting borrowers and investors / savers. It’s a win for both parties, as by cutting out the middleman (banks) and because of our lower overhead costs, we are able to provide a better deal for both borrowers and savers. We have successfully been operating for almost five years now. The typical amount borrowed on our platform is between 500 – 10,000 EUR and our investors can start with as a little as 25 EUR. Our investors are EU wide, and our borrowers are in Slovakia and the Czech Republic.

We are the first and largest P2P lender in Slovakia, and are also one of the main players in the Czech Republic. We have been successful because we understand the market and our customers especially in terms of how to assess risk there.”

Fintnews: Brexit: How is that affecting you?

ŽLTÝ MELÓN: I think it represents an opportunity for companies such as ourselves. The uncertainty that Brexit is creating, both for institutions and individuals, will help reverse some of the trend of gravitation towards London, in terms of money, talent, and attention. I think that Brexit might help shine a spotlight more on what’s available outside of the UK. I also think the disruption from Brexit may make UK firms less able to expand. For instance, some UK lenders may have been able to become pan-European lenders, but now they have huge barriers, of uncertainty, and possibly financial passporting, as well as user preferences in other markets.

Fintnews: It’s giving everyone a chance to catch up possibly?

ŽLTÝ MELÓN: “I wouldn’t say that everything was necessarily more innovative in the UK before now. It’s more like Brexit gives other areas and regions an ability to shine, to be seen. There are some great companies with very innovative products that are thriving outside of the UK, but that wouldn’t be seen until now. For example, the financing of deposits for mortgages. This is not available in UK (as far as we understand), yet it is well established in Slovakia. We just launched our new mortgage deposit loans, and as we already do loans to finance the reservation fee and deposit for new build homes, it’s already familiar to our investors. It’s also guaranteed and the investors’ money is secure.

Fintnews: How do existing mortgage lenders respond to that?

ŽLTÝ MELÓN: Collaboratively. We are working with a leading mortgage finance provider as well as several real estate developers. Recent regulations here ended the 100% mortgage, now it’s 80% in most cases. There’s a real need for traditional mortgage lenders to have the 20% gap filled. We are supporting the existing industry, which was disrupted by regulation, to maintain stability.

The crucial thing that makes this secure, for borrowers, investors and mortgage providers, is that in Slovakia our new loans are to people who have already been approved for a mortgage by their bank. This means that both they and the property they are buying have been thoroughly verified, which isn’t true for most current forms of P2P real estate investments.

Our investors don’t need to go and do lots of background research, or know anything about property in order to invest in this loan. Also, while the loans are taken out over a period of 25 or 30 years, which makes them affordable for borrowers, the investors are only signing up for 5 years at a time, with a return of 5.9%. Compared to Ratesetter and Zopa, it’s very attractive.

Next edition: How bidding for loans on a P2P platform works in practice

Jos Henson-Grič, Head of International Investor Relations at Žltý Melón https://www.zltymelon.sk/

Originally printed in the 15th edition of The FintechTimes

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