Post by martins on Apr 7, 2016 9:50:00 GMT
With the largest non-bank mortgage lender in Latvia, West Kredit, connecting to Mintos yesterday, the total number of loan originators using Mintos marketplace to fund loans has reached 10. I wanted to take the opportunity of this milestone and provide my perspective about diversification.
At the core Mintos marketplace enables non-bank lenders that traditionally have been balance sheet lenders to use marketplace model to fund the loans, and thus become hybrid lenders (part of the loans are funded by balance sheet, part through marketplace). For investors, Mintos provides an access to loans that previously were practically inaccessible for investment.
Most of the loan originators using our marketplace have been lending for years and now, with the help of Mintos, are opening their loan books for investors to invest in. That provides a great chance for investors to diversify – as part of one marketplace investors can diversify not only across borrowers or countries, but also across loan products and, importantly, loan originators, which are originating, underwriting, and servicing loans.
In essence, each of the loan originators on Mintos marketplace represents a separate platform and investors can diversify across 10 different platforms on Mintos marketplace today. A common misconception what we have seen is that when investing through Mintos marketplace investors assume that they are diversifying across Mintos and the other p2p platforms they are using. While it is true to some extent, in essence investors are diversifying across the underlying loan originator (e.g. Capitalia, Debifo, Mogo, etc.) and the other p2p platforms they are using. Therefore, if investor choose to invest via Mintos in loans originated by say ACEMA, Banknote, and Creamfinance and invests also through Platform A and Platform B, he/she/it is actually diversifying across 5 platforms, not 3.
It cannot be emphasised enough how important diversification is in reaching long-term financial goals while minimising risk. Diversifying across platforms is crucial and sometimes overlooked.
At the core Mintos marketplace enables non-bank lenders that traditionally have been balance sheet lenders to use marketplace model to fund the loans, and thus become hybrid lenders (part of the loans are funded by balance sheet, part through marketplace). For investors, Mintos provides an access to loans that previously were practically inaccessible for investment.
Most of the loan originators using our marketplace have been lending for years and now, with the help of Mintos, are opening their loan books for investors to invest in. That provides a great chance for investors to diversify – as part of one marketplace investors can diversify not only across borrowers or countries, but also across loan products and, importantly, loan originators, which are originating, underwriting, and servicing loans.
In essence, each of the loan originators on Mintos marketplace represents a separate platform and investors can diversify across 10 different platforms on Mintos marketplace today. A common misconception what we have seen is that when investing through Mintos marketplace investors assume that they are diversifying across Mintos and the other p2p platforms they are using. While it is true to some extent, in essence investors are diversifying across the underlying loan originator (e.g. Capitalia, Debifo, Mogo, etc.) and the other p2p platforms they are using. Therefore, if investor choose to invest via Mintos in loans originated by say ACEMA, Banknote, and Creamfinance and invests also through Platform A and Platform B, he/she/it is actually diversifying across 5 platforms, not 3.
It cannot be emphasised enough how important diversification is in reaching long-term financial goals while minimising risk. Diversifying across platforms is crucial and sometimes overlooked.