How Risks are Minimised on Monexo’s P2P Marketplace26 October, 2015
The P2P market has grown 84% globally this year. Rapid technology driven transactions and approvals, higher returns and protection against volatile market conditions, and affordable interest rates for borrowers are all factors that have led to the industry’s increasing attraction.
Today on Monexo Monday, we look at the steps that Monexo has taken to significantly minimise your risk in its marketplace.
Third Party Trust CompanyAlign with regulations set by the FCA for P2P lending in the UK, Monexo has partnered with an independent third party company, the Hong Kong Trust Company (HKTC). The HKTC stores all funds securely and oversees transactions between borrowers and lenders in place of Monexo, adding an extra layer of security. Read our blog post on The Top 3 P2P Tips for a better perspective on peer to peer investments.
Screened borrowersAt Monexo, any prospective borrower is put through a screening process before a loan application is approved. This process includes investigating the borrower’s credit history, particularly through their TransUnion report. With Monexo’s first product, rental cash-in, borrowers can take out a loan against future rental income on an owned property in Hong Kong. Monexo verifies all aspects of the borrower's application and gives each borrower a rating between M1-M8 (M1 being the safest). Through screening, Monexo ensures that borrowers in the marketplace carry less default risk and gives lenders a transparent view on the risk level of various loans.
DiversificationMonexo allows and encourages lenders to diversify their portfolio to protect against default risk. Any given lender can spread his deposit across a portfolio of loans of his choosing based on risk ratings and interest rates. Monexo allows a minimum deposit of as little as HKD1,000 into each loan. In this way, if a certain borrower is unable to repay a loan, the lender’s loss is offset by the gains from the various other loans in your portfolio. Read our detailed FAQ section to explore our diversification possibilities in more depth.
Insurance against borrower risksMonexo offers an insurance plan backed by AIG to protect against uncontrollable scenarios on the borrower’s side. With the rental cash in product, borrowers take loans against their future rental income - for example, if for any reason a tenant cannot pay back the loan for health reasons, or the rental property is damaged due to geological factors, AIG will cover the lost income up to a certain point, protecting lenders from any of these unpredictable events. To read more about Monexo AIG Protector, click here.
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