Interview by Jonas Schmidt, P2PMarketData

TWINO has been around since 2009, making it one of the most experienced companies in the marketplace lending industry. It is also one of the biggest. In Europe, TWINO has a market share of 5.75%, and more than €770 million has been funded through the TWINO investment platform.

In this interview, you can learn more about the TWINO company ownership structure, how TWINO is trying to mitigate investor risk, and essentials about investing on TWINO, explained directly by CEO Anastasija Oļeiņika. We also had an interesting talk with Anastasija about where both TWINO and the marketplace lending industry are heading – and without spoiling too much, I think it is safe to say that more and better regulation is the way to go.

The Story of TWINO

Who came up with the idea of TWINO, and why was it founded?

After the global economic crisis in 2008, a generation of world-leading Fintech startups and scaleups were born, including TWINO. In 2009, Armands Broks created TWINO Group – an international financial services company. As of today, TWINO has issued more than 1.3 billion EUR in loans to individuals, small and medium-sized businesses, and real estate development projects. In 2015, Armands founded the TWINO peer-to-peer investment platform (www.twino.eu), which has now become one of the most powerful players in continental Europe. Armands was one of the first founders in the financial technology industry in Latvia.

Who financed TWINO in the beginning? How is the ownership structure today?

The company’s sole shareholder is Armands Broks, who managed to earn his first significant capital by the time he founded TWINO in the bioenergy industry. We have never used any external equity financing till now.

Investing on TWINO

Could you briefly explain what type of investing you offer at TWINO?

TWINO is bringing together borrowers and investors. Essentially, we are offering a seamless experience to our investors through the TWINO P2P Investment platform, where investors can invest in loans that are issued by TWINO Group companies. At the moment, we offer investments in consumer loans, instalment loans that are issued to small and medium enterprises (SME) and backed by a personal guarantee of the borrower, and broad investment opportunities in loans secured by real estate backed by collateral – TWINO Ventures. That all comes with fixed returns and no fees.

Who is the average investor at TWINO?

We are happy to have highly experienced investors among our ranks. The average TWINO investor is relatively young, with an average age of 33 years. 95% of TWINO P2P platform investors are private individuals. Geographically the highest number of investors (30%) come from Germany. An investor survey we carried out in late 2020 also highlighted that TWINO has mature investors contributing to the P2P lending sector for three to five years (42% of the respondents) or even more than five years (10% of the respondents).

If I decide to place money at TWINO and build a diversified portfolio, how much can I expect in net yearly return after losses and delayed payments?

The average investor return is 10.46% p.a. and it’s important to note that historically there were no credit losses to investors, as investments are protected with TWINO Group guarantees, backed by a personal guarantee or a mortgage. Investors who go for higher returns via investing with the Currency Exposure feature are exposed to currency fluctuations.

Risk Handling and TWINO Protection Schemes

How do you make sure that the loans listed on TWINO are safe for investors to put money into?

TWINO has over ten years of experience in lending operations, and we are one of the few investment platforms offering to fund loans issued by our subsidiaries, enabling higher flexibility and better oversight. All loans listed on the TWINO platform are issued by loan originators or brokers that are part of TWINO Group, therefore adding extra security for investors. We see this as a major advantage as our risk management team is able to strictly monitor the lending and repayment tendencies and the performance of loans and improve our credit scoring algorithms as well as recognize negative trends at an early stage.

You offer two types of investment protection on TWINO: Buyback Guarantee and Payment Guarantee. How do these protection schemes affect the risk faced by investors?

The main idea behind these protection schemes is to exclude the credit risk for investors by guaranteeing payments even if a borrower is late with the payment. With the BuyBack Guarantee, the non-performing loans are bought back from investors after the 60th day of delay (repaying the invested principal amount and accrued interest for the whole period of delay), while with the Payment Guarantee, TWINO basically acts as a guarantor for the borrower – regardless of the actions or inactions of the borrower, the investor will always receive repayments per loan schedule.

If the unlikely event should occur that TWINO goes out of business. What will happen to the investors’ money?

TWINO is safe, simple, and transparent. Our industry-leading protection guarantees mean that investors are protected against default, and our advanced risk model means that we only lend to carefully vetted, approved borrowers. In any circumstances, our borrowers are obliged to repay the loans, and investors are entitled to all proceeds arising from the underlying loan agreements (principal, interest rate, late fees, etc.). In addition, TWINO has a strong capital and liquidity position to support even major shortfalls in portfolio performance. We are currently also in the process of obtaining an Investment Brokerage license with the Latvian Financial and Capital Market Commission (FCMC) – this, on top, will offer an investor protection guarantee of up to €20,000.

A Look at the Marketplace Lending Industry

TWINO was founded in 2009, which means it is one of the oldest platforms in the industry. In your view, what have been the most significant challenges so far?

The Covid-19 pandemic is the latest challenge that comes to mind. We were able to switch to remote work immediately and adjust our business operations very quickly. We tackled market challenges and survived this time without much damage and even with moderate growth. The fact that our investor numbers keep growing and that we have not only rebounded to pre-Covid-19 levels but even seen an increase confirms that. To put it in perspective, the investor portfolio has grown by 13% compared to January 2020.

Who do you see as your biggest competitors, and what sets TWINO apart from them?

TWINO’s more than ten years of experience in digital consumer lending and P2P investment, the use of cutting-edge technology, extensive data science knowledge, a disruptive nature is what sets us apart. Moreover, we have managed to build a very strong and dedicated team that shares similar values. They are highly qualified industry professionals that have had years of experience in their respective fields of work.

We have strong internal product analytics that helps us to make smart and timely data-driven decisions. Our product has proven to be highly competitive in the currently turbulent global economic landscape. The key drivers have been an attractive rate of return for investors (on average 10.46%), investor protection schemes, and the high liquidity, meaning that funds can be withdrawn at short notice. And on top of everything, our operations are profitable.

What do you think the future of marketplace lending looks like? Which challenges do you see for the industry in the coming years?

TWINO eagerly supports the shift towards a regulated P2P lending industry, with all major players securing the license as soon as possible. Licensing defines common requirements, standards, and security measures for industry players, strengthening the credibility and improving our industry’s reputation in the eyes of investors. These improvements will also help lending platforms ensure continuous growth and offer new directions and services.

The steps taken towards regulating the industry will transform the Latvian P2P market situation, with only compliant and licensed companies remaining in the long run. We can already see that companies that did not wish to obtain a license have stopped their operations or will do it in the near future. Meanwhile, the remaining companies are taking the necessary steps to get licensed.

The Future of TWINO: Responsibility and Regulation

What is TWINO’s strategy for the coming years? Have you planned any new initiatives? Do you have a vision for the future?

We are always looking for new ways to make the investing process for our investors as seamless as possible; thus, we are considering expanding the range of investment products available on the platform in 2021. TWINO Group will also continue to explore possibilities to diversify our operations by expanding geographical presence in the new markets with high return potential.

As a leading European P2P market player, we believe it’s our responsibility to define the standard for the whole industry. We are convinced that becoming regulated is the right – and the only – path that every P2P lending platform with serious and long-term plans should take. TWINO Latvian and Polish teams are actively collaborating with local regulators within the process of licensing our operations. In Latvia, we’re currently at the final stage of becoming a licensed Investment Brokerage company and are looking forward to receiving the license from FCMC very soon. We believe that the licensing process is highly beneficial, as it will contribute to our reputation. To secure the license, TWINO actively collaborated with the FCMC over the course of many months, drafting the necessary procedures and making the adjustments to how our platform works. In addition, we’ve taken significant steps to strengthen Anti-Money Laundering (AML) procedures and improved the corporate governance processes required for acquiring the license.

If we look ten years down the road and TWINO no longer exists: What went wrong?

With our strong team and ambition, I don’t see it coming under any circumstances. Our aim is to become a billion-dollar company in the coming years. We are here to stay and have many exciting projects in our pipeline!

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