Beginning of the year is the best time to recap the previous year and to reflect on the year ahead. In terms of peer-to-peer (P2P) lending and fintech market in general, 2018 was really exciting and eventful in Lithuania, one of the fastest-growing countries that prioritise fintech. It seems that 2019 should be equally interesting.
Further on, I will focus on three aspects: (i) the most important 2018 events in the Lithuanian market, (ii) the most important 2018 events in NEO Finance and (iii) the outlook for 2019. I am convinced that this article will be of interest for those who want to get better acquainted with the microclimate in Lithuania, and also those looking for some interesting information on P2P in the country. I have a big bunch of information!
2018 in the Lithuanian P2P lending market was the year of ‘stabilisation’ and ‘settling down’. The Lithuanian P2P market grew: Although it was not a two-fold growth like in 2017, a growth of more than 50% was nonetheless impressive. In 2018, the Lithuanian P2P platforms issued consumer loans in the amount of EUR 26,748,691 (EUR 17,723,952 in 2017). In 2018, NEO Finance issued consumer loans in the amount of EUR 14,274,422 (53.4% market share), in 2017 – EUR 8,942,047 (50.5% market share).
P2P lending as a type of investment showed great results in 2018, significantly outweighing other types of investment. A comparison of P2P lending and other types of investment is provided below:
Speaking more broadly about the entire fintech industry, as the Chairman of Fintech Lithuania Association, I am pleased that Lithuania is becoming an increasingly progressive and attractive country. In 2018, the Bank of Lithuania has started cooperation with two global enterprises: Revolut, which has secured a Specialised bank license in Lithuania, and Google Payment Ltd, which was granted an electronic money institution licence. Despite the small area and population size, it is obvious that we are becoming more and more important players on the European fintech market.
Globally, I see a trend which I call ‘the second wave of fintech’. The first wave came some 20 years ago, around 1998, when such companies as PayPal were founded. Today, particularly given the EU’s Second Payment Services Directive (PSD2) appearance, the second wave of fintech is visible even better, and this time, it is also felt in Lithuania, which was not the case 20 years ago. Favourable microclimate and laws in the country, as well as positive attitude to fintech enterprises, have determined the fact that we are now the second country in Europe, only behind the United Kingdom, to issue the largest number of electronic money institution (EMI) licenses (39 and 128 EMI licences, respectively).
Speaking further about the P2P market in Lithuania and its leader NEO Finance, some interesting developments have also happened, and the year was eventful.
Starting from the most obvious stats: by 31st December 2018, NEO Finance issued consumer loans in the amount of nearly EUR 27 million, whereas the other two Lithuanian P2P platforms totalled EUR 16.7 million and EUR 14 million. Furthermore, in October 2018, NEO Finance reached the P2P lending record in Lithuania, issuing consumer loans in the amount of EUR 1.5 million in one month.
Working intensely on issuing consumer loans, we have also improved our services. In 2018, we invested over EUR 200,000 in the development of our IT system.
We have also launched the Payment initiation service (PIS). At first, we used to offer it exclusively to our clients, but after we saw that its quality was clearly better than that of other similar services, we could not resist offering it to corporate clients. Currently, among our PIS clients lie the largest ticket distributor in Lithuania, two platforms for utilities collection, the largest restaurant guide, an electronic grade book service provider, etc.
Another landmark in our history has been the crowdfunding campaign on Seedrs platform. We are pleased to have been selected as participants of the campaign (Seedrs approve only 1% of applications). We are particularly pleased to have been the first Lithuanian company on Seedrs (later in 2018, a Lithuanian startup TransferGo became the second Lithuanian company on Seedrs).
In addition to the crowdfunding campaign, we announced the planned IPO. We will implement it soon, in Q1 2019. Other plans for 2019 include fast increase in the scope of our operations. As is the case every year, we will review our credit rating methodology: It is our unique methodology developed by one of the Board members of NEO Finance, a long-term head of risk management of one of the largest Lithuanian commercial banks. The method is based on the internal data of NEO Finance and other data available on the Lithuanian market.
I believe that the progressive trend will continue in Lithuania in 2019, while Brexit will boost the development of Lithuania as the fintech incubator. Meanwhile, NEO Finance will remain the leading Lithuanian P2P consumer loan platform.
Founder and Chair of the Board