Income, a new peer-to-peer platform for consumer and business loans, has announced its launch into Europe. The fintech, which was founded in Estonia in 2020, makes investments in loans more secure, more transparent and thus even more attractive for investors. Income was founded by Kimmo Rytkönen, Meliina Räty, and Mikk Läänemets, who are now opening a new chapter in the P2P investment industry with their company.
In keeping with the motto “by investors for investors”, Income makes it possible to participate in safe and lucrative investment options that offer an average return of around 10%, even in times of negative interest rates and the coronavirus. Apart from the buy-back guarantee, all investors are protected by additional security measures, which protect the investors in the event of loan originator defaults.
At the end of the 2000s, P2P lending established itself as an alternative to traditional financing. At that time, small loans were generally uninteresting for financial investors and consumers had few opportunities to find financial partners to help them realise their goals. The first generation of P2P marketplaces changed this rapidly – the new digital platforms quickly and easily connected loan seekers with investors looking for attractive investment opportunities. Today’s second generation of P2P platforms added another player that made P2P investments even safer and more convenient: the so-called loan originators (LO) – these are consumer finance companies that offer loans to borrowers outside a platform and then place them on the P2P platforms. Investors can quickly and easily acquire shares in these loans and the LOs take care of the further credit and risk management for them. Investors typically earn about 10-12% yields p.a in peer to peer.
Income Starts the Third Generation of P2P Marketplaces
Income stands for a balanced P2P business model in which investors are equal partners. Investors not only receive buy-back guarantees, which oblige LO to repay the invested money to the investors in the event of a borrower’s default. Income also sets up an additional financial cushion that acts as a collateral and ensures that investors are paid out first in the event of an LO’s default. In addition, Income always reviews LO according to the most stringent due diligence standards: The platform monitors an LO’s track record in granting loans, the professionalism of the LO management team and the LO’s financial leeway. Should an LO default, Income, in contrast to other platforms, offers investors additional protection: the proceeds from ongoing loans that the LO in question has placed on the platform are collected by Income and prioritized to settle the investors’ claims.
“We founded Income to bring more security and transparency to the very opaque P2P credit market. The peer-to-peer principle known from the IT world, where all partners in a network are on an equal footing, is truly practised here and fully lives up to its name,” said Kimmo Rytkönen, CEO of Income.