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.


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!


MoneyZen portfolio, 12 months

By the end of August I will have been investing into Moneyzen for a full year, so it was time to make a decision about the future plans for this part of my portfolio, especially since it’s currently competing against Estateguru in terms of contributions.



Changing strategies?

Moneyzen has, from the start, been struggling with growing their overall loan portfolio at a sustainable rate. Investors have a lot of free money to invest, but they just didn’t seem to be getting the market share that they wanted due to existing competition in Estonia.

Several of the people I know have been waiting for some sort of a fix for this, and I must say we waited for some kind of an announcement to come way earlier. So, this week Moneyzen announced that they are making their loans more easily accessible which is a recommendation that’s been on the front lines of many bloggers’ posts.

They have extended the deadline of loans from 5 years to 7 years making them stand out among other loan provides, and the maximum loan amount has been boosted from 5000 euros to 10000 euros, bringing them up to par with the same amounts that Bondora provides. It’s early to tell if that will make them take more of a market share, but the extended length of loan contracts might attract a different kind of clientele.

Status of my portfolio

When I started investing into Moneyzen my original plan was to add in 50€/month to create a smaller social lending portfolio with a different provider than Bondora, since Bondora was making up a significant part of my portfolio at that point. Soon, however, I realised that the 50€/month was not achievable due to a lack of loans.

Another issue with Moneyzen is that the IT developments haven’t caught up with their ambitions, meaning that the site causes a liquidity problem. You can’t have enough loans to causes meaningful cash flow (which you’d be able to transfer out if necessary) and there is no secondary market. The biggest problem by far though is the lack of overall statistics – a year into investing I’m still not able to tell you at a glance how much money I made in interest last month.


Therefore the decision for at least the second part of this year had to be made. This morning I transferred the last 25€ into Moneyzen for now, bringing the total transfers to 400€ euros, which means 2/3 of my original year’s goal, which I suppose isn’t terrible. (Neither is the close to 40€ interest earned off it.)

I’ll wait for more to happen, mostly:

– less cash drag

– an implemented secondary market

– a bigger market share

– better overall statistics

– recovery statistics (I have 2 defaulted loans)

All the best to Moneyzen, and I hope I have a reason to increase my investments for next year. For 2015 I’m done, I’ll just track how well the money moves, and I guess it can be a somewhat obscure emergency fund type thing that I might have access to at some point in the future.

MoneyZen portfolio, 10 months

I realised then titling this post that soon I will have been investing into Moneyzen for a year. The only thought that comes to mind with this – underwhelming. Moneyzen has greatly underperformed my expectations and if a secondary market existed at this point I’d likely make a full exit from the site.



Thoughts on Moneyzen’s current situation

Having invested into Moneyzen for 10 months now, I’m struggling to even fill my original goal of 50€ invested per month. I haven’t wanted to reduce the requirements I have for the loans I wish to invest into since their whole business plan was to have high quality borrowers. This means that while I’ve kept interests reasonable in my opinion then money has been moving slowly and I’ve had time when no loans have gone out for close to a month.

I’m not sure if it’s an issue with their business model or the way they select their clients. At this rate the lack of liquidity is becoming a bit of a liability since exiting the portal is a time consuming process. Also, I’ve now had two loans go into collections as well, which means that a sum close to the number of euros I’ve made in investments is now locked down.

Just overall I’m feeling very unimpressed and I can’t really figure out what the issue is. Is there truly a level of market saturation that they can’t break through? Is there a lack of clients that they’d like or is it just that at the interest point they are at people would prefer loans? Will the hoped expansion to Finland finally be the key? Whatever it is, then other portals are showing growth while Moneyzen is just not doing much of anything. I’m considering just stopping all investments at this point to not lock down more money and just see how it goes.

First look into Estateguru

Estateguru is one of the six crowdfunding/social lending platforms that are active on the Estonian market. It’s one of the two portals that focuses on real estate, and while Crowdestate helps investors make capital investments then Estateguru is focused on giving out loans that have real estate as collateral. (Meaning if a loan defaults then there’s something you can take away from the lender, unlike in social lending.)


Why not before?

Estateguru is currently on its 10th project (and it’s a 400 000€ project!), and has definitely gotten the project pipeline going. When I was picking an additional site to invest into, I ended up choosing Moneyzen before, because they were just around earlier, but currently since there’s not money really moving at Moneyzen, then it’s probably time to think a bit about switching out a part of my portfolio to Estateguru.

Upsides & downsides of Estateguru

For investors who are looking at reliability, I can see the definite appeal of investing into real estate loans. If something were to go badly, then it’s obvious why an investor would feel more confident if there’s collateral attached to the loan.

One of the downsides is probably a similar issue that Crowdestate has – it’s difficult to quickly diversify your portfolio, since the minimum sum here is 50€ (it’s 100€ at CrowdEstate). This means that while in social lending it’s easy to reach a goal of 100 contracts to diversify then you can’t really reasonably expect that when it comes to real estate crowdfunding.

Another key difference that a lot of people probably enjoy is the fact that while Crowdestate is more focused on capital growth investments, then Estateguru investments allow for cashflow, which means that you can get the ball of compound interest rolling quicker.

The interest rates of real estate loans are obviously far lower than in the consumer credit market (Estateguru averages 11,5%), but since in theory they have less risk, then the difference is probably justifiable for most investors.

Current plan

Since my original plan for 50€/month into MZ has turned out to not be viable, then I’m currently planning on investing the 50€/month into Estateguru instead. Depending on the way they get their project pipeline going that might end up being more if they have projects I truly enjoy. Since there is curerntly silence on the CrowdEstate front, then I’m intrigued to see what will happen once both sites have projects up at the same time – whether or not investors will have the resources to fill up the investments.

(If anyone feels like signing up, they have a referral program that earns a 0,5% cashback to you and your referrer. Feel free to use the code EGU05422)

MoneyZen portfolio, 8 months

When I previously described MoneyZen as positively boring, I might have to up- or downgrade the description to just boring. There is very little happening with the portfolio, little enough that I actually forget to check on it at all. Which I suppose in some way is great, because that’s the benchmark of truly passive investing.

Portfolio changes


I actually didn’t add any money to Moneyzen in March, because I think I didn’t manage to get a single loan to go out, and I refuse to lower my interest rates even more.  I added in 25€ in April, and even that hasn’t completely gone into loans.

So, there are some fundamental issues here with loan volume, which means that you can’t currently have Moneyzen as your main social lending investment site unless you’re willing to give up on proper diversification and lower your interest rates to somewhat uncomfortable levels.

Overall, at least there’s some movement. They started sending out newsletters this month as well, so things are happening, albeit very slowly.

Portfolio balance


They added a new group of 500-600, but since I don’t fundamentally know enough about their credit scoring model and I have few enough loans to struggle with proper levels of diversification, so I’m currently not planning to add those into the portfolio manager.

Overall, the loans are all paying nicely, and those who fall behind seem to catch up after a while. I currently have one loan that is steadily heading towards bankruptcy, so I’m interested to see how the recovery process works for them.

Also, since there is no way to see how much you earn from interest per month, since the functionality has now been added, then I don’t even really know how much I earned, which is problematic. There is no easy way to find this out either, so I’m hoping for more functional IT updates to be able to run better statistics of my portfolio.