With growth in popularity and number of FinTech companies, it is natural that some misconceptions may appear.
For instance, some people are under the impression that all FinTechs use the P2P model.
Under this model, companies connect borrowers and lenders through a digital platform, bypassing traditional financial intermediaries.
As you cut the middleman, both sides can access better interest rates.
This can present new challenges, namely two:
Need for the lender to assess the risk directly;and
Trustworthiness of Loan Originators (responsible for bringing in borrowers on some platforms).
While investors are responsible for their own decisions, what some Loan Originators do to gain investor confidence is align their interests through a “skin-in-the-game” approach, as they lend some money of their own to the borrowers they bring.
This way, if investors lose, they lose as well.
The Iban Wallet approach
Looking at it at a glance, it can be mistaken for P2P lending.
Lenders provide funds, the platform intermediates the process, transferring the funds to loan originators that underwrite loans and issue them to borrowers.
But here lies the difference: loan originators underwrite loans and issue them to borrowers.
When investments are made through Iban Wallet, the loans have already been issued.
The loan originators are already contractually bound to the loans, and enter into a credit purchase with investors originating from several aggregated loans, diversifying the investment.
This is what allows Iban Wallet to offer a higher degree of liquidity to investors, as they are able to make a withdrawal request at any time (early cancelation fee may apply if the term on some products is not respected).
And herein lies the loan originators” motivation: on the difference between the interest rate charged to the borrower (typically higher) and the ones provided to Iban Wallet. Within this difference, they are able to cover their costs and gain a profit.
Iban is a Fintech that provides a simple and secure marketplace where you can find a range of financial products.
With cutting-edge technology, it democratizes access to some of the best investment products and can be used as a powerful tool for financial management and adding value to your capital.
With a personalized management adapted to each client, you will always be able to make the right decision for you, according to your profile and specific needs.
Die Bildrechte liegen bei dem Verfasser der Mitteilung.