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Peer to Peer Lending Why this senior investment professional uses P2P lending for wealth creation.

Why this senior investment professional uses P2P lending for wealth creation.

This article will help the financial advisory community better understand P2P lending and how this asset class caters to investors across all profiles.
Monexo Feature Dec 5, 2017

This is the first of a series of articles framed around investors who have experienced P2P lending through Monexo.

Monexo organises regular webinar sessions to educate financial advisors/ IFAs about the benefits of P2P lending as an asset class for investors. To register for the free webinar on Thursday, please click here.

For Ramanathan Krishnamoorthy - investing is not new territory. Backed with nearly 2 decades of creating wealth for investors across asset classes through his stint with ING Investment as Chief Investment Officer, Ram today advises leading HNI families on investment approach and strategy. 

In times where bank fixed deposit rates are at a historical low and debt mutual funds significantly underperforming, Ram's search for a new investment product that adds additional value to his debt portfolio brought him to P2P lending and eventually to Monexo. 

Having been in financial services and investment advisory for over 2 decades, Ram immediately sensed the potential that P2P lending offered in it’s ability to provide him with a new, rewarding asset class that has traditionally been accessible only to financial institutions – consumer loans.

The simple question was – ‘Banks earn so much through consumer lending – from a personal standpoint, without any credit risk management expertise - can I achieve similar high yields with sufficient tools to mitigate default risk through P2P lending ?

Consumer credit comprising personal loans has been an asset class which banks have profiteered from for a long time now. P2P lending, as Ram was quick to spot, offered a way, through the internet, to open up this asset class and make it accessible to ordinary investors and completely bypass the traditional banking ecosystem.

P2P lending brings offers investors the abiity to lend online to borrowers who are screened, graded and priced by the P2P lending platform. Lenders are able to choose and lend to multiple borrowers – thereby minimizing risk while borrowers are provided quick, affordbable loans through the platform.

P2P lending clearly offered a two pronged value proposition which appealed to Ram – 1) the convenience of monthly cashflow and steady return – which comes with debt products combined with 2) the sort of yields / IRR one is used to seeing during in the equity market. Banks make a ton of money by lending to borrowers and P2P lending offered Ram a unique opportunity to invest directly in consumer loans and enjoy the full spread on the lending investment.

Why Monexo ? :

Ram got to know about Monexo online and attended a series of webinars with our representatives to understand the P2P lending model, risk mitigation infrastructure and more importantly the experience of Monexo’s team before deciding to invest on the platform.

A robust borrower screening process, excellent loan performance trackrecord, industry first Escrow account framework for lending along with plenty of options to derisk lending through diversification provided added comfort.

Ram was also particularly impressed with the advanced level of customization and the intuitive user experience which Monexo offered in terms of portfolio management, lending process & returns monitoring.

Over time, the comfort with this new asset class and the platform has only grown. Ram has been able to completely automate his entire lending through Monexo’s auto investing facility and today only logs in to the platform once a month to check on the status of his repayments.

Ram’s lending portfolio with Monexo today averages around 19% gross IRR on an annualized basis. He is no doubt thrilled.  

With RBI just releasing the regulatory framework for Peer to Peer lending platforms in India – Ram believes this will only increase investor confidence in this asset class and propel a whole new generation of investors to look at lending as a viable, sustainable and rewarding way to invest.

Looking back, Ram's take on his decision to invest with Monexo is simple - 'Consumer lending is the most profitable asset in a bank. Monexo makes this asset accessible to all investors looking for stable cashflows and better returns' 

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