Interview with Moneyzen’s CEO Daniel Lumi

Since Moneyzen is turning one year old, then I took the chance to ask their CEO a bit about how Moneyzen is doing, what kind of plans they have moving ahead and what kind of difficulties they face when trying to build up a P2P lending site.

moneyzen

One year for Moneyzen, what has gone well, what has been problematic?

+ going well

*Good growth rate (we are still operating in 1 country)

*Our business model is working (quality wise, investors return)

*Huge opportunities (even more than a year ago) and … we are smarter

*Change(s) of regulations (much in favour of p2p platforms in Estonia)

*Strong investor (as users) presence in MoneyZen

– needs work

*We are still operating in 1 country (despite working strategy)

*No English version of webpage (to be implemented in september 2015)

*Market testing activities has caused delays and setback(s) (we’ve learned from)

*Low number of high quality borrowers (in Estonia)

*Change(s) of regulations additional development and organisational changes, also additional costs

You mentioned regulations, what kind of work is currently ongoing?

To comply with regulations MoneyZen will bear additional fixed and development costs which are necessary for further operations. The enforced law demants internal audit position (to report Financial Inspection (FI)), business activity insurance, reporting and also licence fee. Latest date the application for licence must be filed to FI is 31.12.2015. So preparations in MoneyZen are in progress to comply with all the requirements.

The purpose of regulations is to correct the market and reduce number of companies providing consumer loans (especially instant loans/sms loans).

The regulation should reduce number of such companies significantly.  The regulations are for market correction (good), but we will see most of large instant loan providers continue their activities as well as competition will ease.  This means lower competition, which is not always the best solution for innovation and further development.

Beyond filling requirements for regulations, what are your plans for next year?

By same time next year MoneyZen would like to be operational at least in 3 countries (+2 compared to Estonia). For peer to peer lending company it is essential to achieve business volumes to keep business sustainable.

MoneyZen’s goal is to be sustainable and therefore it has to move to new markets. As for business volumes MoneyZen has 2 scenarions for growth. The minimum scenario is growth rate 100% year-to-year basis.

How has your strategy of “prime lenders” worked out for you?

MoneyZen strategy will remain same – personal and the best peer to peer lending platform quality wise. This is the difference we promise and we deliver.

The bottleneck of the strategy is that the number of very good borrowers is much lower than total number of people looking for money. We are going to adjust scoring model in August 2015. In this case (of adjusting) we will be following credit institutions (banks) policy in even more detail than before.

We are also in the process of developing some new products to support our customers starting with loan market.

As for the statistics:

Loans issued during 1 year (14.07.2014-13.07.2015)  – 798 100 Euros

Defaulted (legal action) from same period                 –   17 100 Euros (2,1 %)

Repaid from defaulted (as of 10.08.2015)                 –     3 300 Euros

These statistics confirm that we are in line with our target quality wise. As for investor set investment return rate then this depends on investors portfolio setup and activity. Monthly blogs have recent investors interest levels disclosed as indication to adjust the interest rate which could participate in the loans.

If investor chooses not to reach then new investors with lower interests are able to invest. In this sense it is fair auction for the lowest interest for borrower. MoneyZen attracts more and more investors every month. Investor investment settings (interest rates) are slowly coming to lower level. We are looking constantly to increase the loan volume to allow more investments for investors. The average interest rate of MoneyZen investors is 21.4%.

This will be supported by loan market feature which will increase the liquidity of investments as they are higher quality investments (compared to market average).

One of (my) complaints has been the speed of web development, what’s happening with that?

Development of MoneyZen business is my personal first priority. There are number of new developments we are preparing and I am certain this will be in benefit of all MoneyZen users. I am also truly thankful to all the investors who have helped us with their comments to improve MoneyZen.

It still is only 1 year of activity so we see quite a number of developments required and I encourage all investors to provide feedback which I can personally take into consideration.

Loan market solution is currently in development stage, earliest prediction is to implement beta version by the end of August or beginning of September (2015). The date of launching the loan market will be provided in MoneyZen blog as soon as we can.

Any non-web related developments happening?

We will have new member of board from August (Jana Loemaa) who has long term experience in lending business. We are also in negotiations to hire another top management professional for further implementation of our growth.

I am stepping down from member of board position (from August 2015) and will concentrate on investors advisory and development of the software. I will continue to invest in MoneyZen as investor and participate in every loan MoneyZen mediates.

Thanks to Daniel for sharing some information about current actions and future plans. P2P investors are always starved for information, so I’m happy to know a bit more about what’s going on!

 

3 thoughts on “Interview with Moneyzen’s CEO Daniel Lumi

  1. Thank you, it is always good to see the in-house view.

    Although it`s a bit unclear – compared to other p2p lending platforms what would be the competitive edge of MoneyZen? Might not be enough to be just another p2p lending site.

    1. They are trying to have a lower default rate compared to other platforms, which should attract investors who are interested in a less risky portfolio. (Default rates impact your P2P portfolio especially in the case of an economic downturn.)

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