The Baltics, the Shining Stars in the EU P2P Lending landscape

  • 2018-05-17
  • Yieldport

RIGA - When people talk about their own silicon valley or where the magic happens in disruptive technologies, its the Baltics you can’t miss in EU Fintech.

Last week the Lithuanian ministry of finance introduced the world’s first security ICO platform open for global-blockchain-businesses, setting the standard towards the first security exchange.

Being on the forefront of technological innovations the Baltics saw the birth of many online lending marketplaces, including: Bondora, a pioneer out of Estonia, Savy (LT), Mintos (LV) and Twino (LV).

Due to the high level of technology penetration and technology education, these countries have produced a disproportionally high number of technology hardware and software startups ever since the beginning of the digital revolution.

A Nurturing Innovational Environment

The Baltics have been first movers on many technological innovations being stimulated by an environment where government and business interests are aligned, letting Fintech emerge.

From being the birthplace of companies interrupting the payment space such as Transferwise to a multitude of P2P platforms being on the forefront of the P2P investing revolution.

We have to understand the Baltics are a small market. Conditions that shape commitment to international expansion, reminding us of the outside vision and mentality of the Dutch VOC in the 17th century.

Take into account the highly educated workforce and steady co-operation with traditional market participants such as Baltic banks nurturing Fintech initiaves through matters as the Rietumu Fintech Challenge, close collaboration is developed in forming new products and services.

Baltic P2P Landscape

The Baltics have been the birthplace of many P2P platforms setting EU standards and leading the way.
Twino, Bondora and Mintos are among the largest marketplaces for consumer loans in Continental Europe, being around since the start of the P2P investing revolution. Standing out in low default rates, providing liquidity and adding (buy back) guarantees.

Yields offered, from a Welltrado report comparison report, show the Baltics skyrocket above the rest.
Finbee (LV) offers average yields as high as 20%, while all of them offering returns between 10-20%.
An explanations of the yield/risk ratio is that they use quality originators, a magic formula for due diligence, using new technologies such as machine learning and artificial intelligence.

One too watch is Peerberry (LV) using outside loan originators and creating a marketplace to trade consumer loans offering a 12.49% on average.

Estateguru (ES) which facilitates short- and mid-term property loans are growing substantially and are even targeting institutional investors with their new bond program.

Baltics, Lead by Example

As the framework regulating matters in EU cross border crowdfunding is lagging behind in EU, we welcome the initiative commissioned by the EU to establish a taskforce in Lithunia bringing together SME advisors, startup, accountants and accelerators to be trained in alternative finance.

While we strive to make cross border investing as easy as investing in international stock markets, we believe in close conjunction between initiators in blockchain and smart contracts for the creation of a industry standard. A EU passport where platform initiators and funders can find eachother together working towards a standard risk assesment to create a homogenous cross border P2P market.

Either its by the ‘outside view’ of the educated Baltic people, or the nurturing co-operation between doing business and legislation with few bounderies to evolve we sure we are going to work together.

To see P2P propositions hold strong and compete against other investment classes the Baltics are leading the way.