isePankur, the social-lending service, was established in 2008 and pioneered the concept of social lending in Estonia. The service allows individuals and small to medium-sized enterprises to borrow and lend between each other, skipping the whole traditional banking process. The company has just opened up a white-label of their service, allowing other institutions to take a solid social lending platform to their area.
For individuals looking to earn a return on their money, isePankur displays auctions of people looking for money. From there you can analyze the credit history of the borrower and do your own due diligence by asking additional questions. Lenders can then make a bid specifying the investment amount and interest rate, and the system will automatically choose the bids with the lowest interest rates and combine them into one loan.
If you bid was a winner, your isePankur account will be automatically debated and a loan contract will be signed. The borrower will make a fixed monthly payment, and isePankur says they “will handle all problems if they might occur.”
Anytime I hear about giving money to strangers over the internet and then earning a decent return, my suspicions of a Ponzi scheme perk up. But these guys seem legit, and the social-lending model seems so obvious in the modern era that someone has to be doing it right out there. The company won “Best Estonian E-service of 2011” in a competition funded by the European Regional Development Fund. And the company develops and sells financial software for customers such as The Danwood Group in the UK.
isePankur reports that lenders have received annualised returns of over 19% since the company introduced strict risk management policies in 2010. The average loan amount has been €476, with 2356 loans processed, meaning €1121915 has moved through the system. On the lending side, the average loan bid amount has been around €32.
More data can be found on their statistics page, but here are their reported realized returns:
The company has progressed into software sales and licenses its technology to social banking and online lending companies. isePankur also says that negotiations are underway with various new international customers, which include major international banks as well as start-ups aiming to bring the peer-to-peer service to their customers. The company will be responsible for product development and advising their customers on how to establish a market position.