Visit at the Bondora office in Tallinn. Interview with Investor Relations Team Lead, Kairi Kallas. Review 2019

Visit at the Bondora office in Tallinn. Interview with Investor Relations Team Lead, Kairi Kallas. Review 2019

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Bondora Review 2019

Finally I had the chance to visit Bondora at their office in Tallinn, Estonia. Bondora was actually the very first crowdlending platform in my portfolio.  I am still with Bondora today, but at the moment only in their very popular Go and Grow product. I had a great interview and had a tour of the Bondora office. I made a video of the office tour and included it in the article. You can also find it on my Youtube channel

Bondora is a platform with a very long track record and with their very simple Go and Grow product they are an obvious choice for new investors just getting started with investing or very passive investors. 

The interview with Investor Relations Team Lead, Kairi Kallas

Georg: 
Thank you so much for taking the time to talk to me today, Kairi. Can you tell me a little about yourself, your role here at Bondora, and how long you have been here? 

Kairi: 
My name is Kairi Kallas, and I joined Bondora more than five years ago in 2013 when there were fewer than ten people in the company. Throughout the years, I have held various positions in the company. Working in different areas in the business has given me a chance to dive deep into both sides of the product, and get a better understanding of our customers. Today, I’m leading our Investors Relations team. We strive to give first-class customer service to all of our investors. 

Georg: 
Can you tell me a little bit about the Bondora platform in general? What do you offer for investors? 

Kairi: 
Bondora was founded in the height of the global financial crisis over 10 years ago. This was a time when the world was in need of fair finance and a technological revolution. Today, Bondora has almost 84000 investors from 85 countries all around the world who’ve invested more than € 295 million. However, these numbers grow daily. 
We make sure everyone can access the world of investing and earn a reliable net return, without all the complexities. Bondora‘s most popular product and the easiest way to invest is Go & Grow. It’s a simple, reliable product with fast liquidity,  giving investors a return of 6.75%* per year. 

Georg: 
How many employees are you at Bondora? What is inhouse and what is outsourced? Can you tell me a bit more about your specialists? 

Kairi: 
At Bondora, we have always tried to keep the teams as compact as possible and keep everything in-house for the sake of speed and quality. It also helps us to control all the processes more efficiently and make the workflow smoother. Generally, we don’t have any manual tasks at Bondora. We try to keep everything in-house, and automate where possible. This is why we only hire specialists to our teams, and that’s in all departments. To date, we have 61 people from all around the world. Half of the team is made up of data scientists and engineers. But we also have teams in marketing, finance, legal, customer support, product, collection and recovery. Our CEO, Pärtel Tomberg, is the founder of the company and has been leading Bondora for the past decade. 

Georg: 
What is the average investor portfolio size at Bondora

Kairi: 
The portfolio sizes vary between investors, ranging from 1  to seven-figure accounts. The average is around 2000 , and about two-thirds of all Bondora investors are using Bondora Go & Grow

Georg: 
What kind of returns can investors expect? Will this go up or down in the future? 

Kairi: 
If you’re using Bondora Go & Grow, we offer a return of up to 6.75%* per year, and we have no plans to change this for the foreseeable future. Investors love the stability and predictability of this product. 

On the other hand, if you’re investing via any of Bondora‘s other methods, Portfolio Manager and Portfolio Pro, these are variable return products, and investors should be aware that the rate of return will fluctuate throughout the duration of the portfolio. This being said, we tell investors upfront what range their return is expected to fall in based on their chosen risk settings. 

Georg: 
Bondora is really great in terms of options. You have Bondora Go & Grow, Portfolio Manager, and Portfolio Pro. So your platform fits both novice investors, passive investors and experienced investors who wants full control. Can you tell a little bit about the different types of products and what investors they fit? 

Kairi: 
Yes, we’re building a platform that caters to everyone. ‘One-size-fits-all’ doesn’t apply to investment products because people have different goals and finances. 

Bondora Go & Grow is for the people that genuinely value their time. They don’t want to spend their days reviewing company financial statements or traveling around the country to look at real estate projects. For those who prefer a simple, hassle-free experience, stability in returns, and quick access to their money, Bondora Go & Grow is the answer. 

As explained earlier, Portfolio Manager & Portfolio Pro are semi-automated variable return products. This means you get to have control over the specific risk criteria in your portfolio. Also, it’s for those with a long-term outlook on their investments, as the liquidity is incomparable to Bondora Go & Grow. 

A third, and less common, way you can invest with Bondora is via the API. You can build your own program in any common language and have total control over the investments in your portfolio. You’ll need basic programming skills to use it, and lots of time. 

Georg: 
I follow a number of blogs of other investors and most of them experienced that the earnings at Bondora have dropped over the years the last couple of years, from about 18% to 14%. What is the reason for that and how are the future prospects in terms of returns? 

Kairi: 
It’s impossible to comment on the performance of their investments without taking a look into their portfolio – but we’re happy to do this any time, email us at investor@bondora.com

Georg: 
Bondora currently provide loans in Finland, Spain, and Estonia. Are there any plans to expand? What about Southeast Asia? Or other markets in Europe? 

Kairi: 
At the moment, loans are issued in 3 countries. Estonia, Finland, and Spain. There’s a vast opportunity within these markets for us to serve customers in need of consumer finance but who are often put-off by long and offline application processes, as well as ancient credit scoring systems. Bondora expect significant growth within our current markets, but are also considering expanding in potential new European markets. 

Georg: 
Is Bondora open to investors outside of Europe? Could an investor in Japan invest if he had an e.g. Revolut or Paysera account? Do they just need an EU IBAN? 

Kairi: 
In general, we have European investors investing with us. We can also accept investors from outside of the EU with a certain net worth, e.g. if they are accredited investors. To eliminate any doubts, we advise to contact us via investor@bondora.com, and our team are happy to assist. 

Georg: 
How has your platform changed during your 10 years in operation? Did Bondora change it’s business model for example? 

Kairi: 
The short answer is, we’ve adapted to the needs of our customers. Namely, by introducing new products for investors, e.g. Bondora Go & Grow, which makes it 100 times easier to invest. In the beginning, investors were picking and choosing loans in to invest by themselves. This isn’t so common these days. 

Georg: 
How do you find and evaluate borrowers? 

Kairi: 
Bondora has a proprietary credit scoring system to assess the risk of every single loan we issue. The loan is then given a rating from AA to HR. This is calculated using 1000’s of data points to gain a holistic view of the potential risk of default. Traditional data such as that from credit bureaus, population registries, banks, and tax authorities are assessed. But also non-traditional data, such as behavioral data on our site, social media, and more. 

Georg: 
Do you plan to have some kind of buyback/provision fund? 

Kairi: 
We have no plans to add this to the Bondora platform. Instead, we prefer to set our investors’ expectations upfront about what net return they can expect. Overall, this increases their trust with Bondora as we continue to deliver on our promises. 

Georg: 
What is your opinion on buyback? How safe is it really?

Kairi: 
All investors should question the viability of any ‘guarantee’ when tested at scale, and make investment choices based on their own due diligence. 

Georg: 
What about Bondora Go & Grow – is there anything that can jeopardize the payout? In the worst-case scenario, can the funds still be paid out? 

Kairi: 
While building Bondora Go & Grow, we meticulously analysed cash flow data from a number of banks and investment funds. Specifically, their redemption and withdrawal cash flows during the global financial crisis of 2007 to 2008. This, combined with our data, gave us the conclusion of the amount of continuous cash buffers that need to be in place to provide quick liquidity to investors. 

Bondora Go & Grow has been out for nearly 20 months now, and has delivered on the promise of 6.75%* per year to investors. Investors should be aware that this rate is not guaranteed, and we’ve explained this in detail in this video. 

Georg: 
What will actually happen if an investor liquifies his Bondora G&G portfolio? Will the loans be sold on the secondary market? 

Kairi: 
When someone invests in Bondora Go & Grow, they buy a claim of the Bondora Go & Grow portfolio. When they liquidate their account, they sell those claims back. 

Georg: 
Does Bondora plan to have an app? If so, what is the timeline for release? 

Kairi: 
Yes, we have an app planned. Exciting news for many as it has been requested by the community for quite some time, so it’s official – we do have an app planned. The beta release will be toward the end of this year, and it will only be accessible for existing investors using Bondora Go & Grow. 

Georg: 
What is your current default rate and what is the recovery rate at Bondora

Kairi: 
Bondora publish this information every month for investors on our blog. You can find the most recent posts under collection and recovery

Georg: 
I used to have my portfolio in Bondora Portfolio Pro, but I had 4 defaults and currently 3.88 euros in outstanding principal. Very little, but it still hurt a bit. Haha. I will come back to Bondora Portfolio Pro at some point in time with more conservative settings though. But the claim is still there, of course. Will that claim be there forever? Could I get some of my outstanding principal back after e.g. 10-15 years? Will I earn some extra fees from the time in default and from e.g. court fees? 

Kairi: 
To be able to claim money owed to investors, we have created a clear 3-step collection and recovery process aimed at collecting all the debts that occur. 

It is very hard to predict the exact time-frame for the recoveries as each case is different. If the cases are already handed over to a bailiff after the court stage, then the speed of recovery depends on the income and assets of the borrower. 
Bondora receives regular updates on the status of the collection, and if there are changes in the process, the statuses will be updated accordingly. 

The exact process is explained under the 3-step collection and recovery process on our support site. 

Georg: 
Can defaulted loans be sold on the Bondora secondary market? If so, do some investors actually speculate in buying defaulted loans? 

Kairi: 
Yes, it is possible to sell any type of loan on the Bondora secondary market. However, it can take longer to sell a defaulted loan which is not receiving any cash flow. This is why we encourage investors using Bondora Portfolio Manager or Bondora Portfolio Pro to have a long term outlook on their portfolio. 

There are a very few number of investors who will try and buy defaulted loans at a discount and sell at a premium later. We advise against any trading like this, as it’s the most common way we see investors experience poor performance. 

Georg: 
Does Bondora have skin in the game in the loans? 

Kairi: 
Yes, Bondora has a micro share in each of the loans it issues. 

Georg: 
Bondora also has a blog. What kind of information can investors find there? 

Kairi: 
Yes, Bondora has a blog that has been accepted well by the investors. I’d recommend to check it out. The topics range from Bondora-specific posts, the latest in tech and finance, and the in-depth posts on popular culture relatable to our investors. 

I think it’s a place everyone can learn from, both about Bondora, and gain financial knowledge in general. 

Georg: 
Bondora has been operating for 10 years. That means you started up during the last financial crises. How do you think Bondora will manage during a new financial crisis? 

Kairi: 
Every lending decision at Bondora is determined by our proprietary credit modeling system. Taking into account 1000’s of data points, we can accurately assess the risk of any given borrower. Once we issue a loan, we collect data on every single transaction and use this to improve our models. 

In the past decade, we’ve operated in recessionary environments in Spain and Finland, and collected first-hand data on customer’s payment behaviors. Overall, this has helped us improve our credit analytics, so our risk assessments are well prepared for a larger recessionary environment. 

We will actually cover recessions soon on our blog and Youtube channel as well, so stay tuned! 

Georg: 
What kind of platform  do you think will do well in a financial crisis and which will struggle? 

Kairi: 
Firstly, a platform that is trusted by its customers and continues to deliver on its promises. If expectations are set too high – there’s a chance you’ll lose the trust of your customers. Another critical point – a platform which has been built on data-based decisions, and therefore has prepared for any macro economic event, will do better. 

Georg: 
Everybody is talking about regulations. How is Bondora being regulated? What are the impact for the Bondora platform and your investors now and in the near future? 

Kairi: 
So far, there is no unified regulation within P2P lending across Europe. However, this is something we support at Bondora as it could make it easier to scale into additional countries and improve trust with investors. Overall, we have processes in place so we are in line with the European KYC and AML laws, and specific licenses, where applicable. 

Georg: 
Do you invest personally? If so, with what platforms? 

Kairi: 
I only invest in Bondora and also my friends and family. I personally use Bondora Go & Grow as it is a simple, hands-off product which is suitable for me. Checking out properties with or without brokers, making deals, renovating, selling forward etc, or keeping an eye on stock market statuses every evening, isn’t something for me I guess. It might not be for everyone, but it really works for me. 

Georg: 
How does it work with investors funds and Bondoras operational funds in Estonia? Are they separated? 

Kairi: 
The money our customers transfer to Bondora is held on a segregated client account, meaning it doesn’t class as part of the company’s assets. We bank with SEB Bank, one of the largest banking groups in Scandinavia. 

Georg: 
What is your advice for a new investor who just discovered crowdlending? How should they get started with their first investments? 

Kairi: 
I would advise to do a lot of research and due diligence beforehand, e.g. Trustpilot and Google, research specific platforms, ask advice from more sophisticated investors and so on. Yet, the final decision should still be made by yourself. What’s most important, do take action, and start. Sometimes people gets stuck in this loop of searching. 

Georg: 
Does Bondora cooperate with other crowdlending platforms to advise against risky or scammy platforms? Is there an internal network between platforms? 

Kairi: 
We don’t have a personal network, but we do meet a couple of times a year at different conferences and industry gatherings to share industry knowledge and best practices. 

Georg: 
What is the biggest risk for crowdlending in general in the next years? 

Kairi: 
I would say more of a challenge than a risk – but the biggest is to build trust, so more investors will be comfortable investing online and cross-border. 

Georg: 
What is the most exciting future development, addition or new feature on the Bondora platform? 

Kairi: 
This year we have already done a lot of things. The Bondora website is now in 24 languages, we’ve implemented Wishlist, and we’re about to release a really cool update to the Bondora Go & Grow UI. But the most exciting upcoming development is the app, for sure. 

Georg: 
As there are a lot of new platforms popping up, investors do not have a lot of loyalty towards the platforms yet. They jump around a lot when small changes are coming. What are you doing to stay popular with investors? Where do you stand out? 

Kairi: 
One thing investors love about us is our track record, which is one of the longest amongst all P2P platforms. We deliver on our promises and make sure that investors can trust us. 

Georg: 
How do you work with cybersecurity? 

Kairi: 
This is something we take very seriously. At Bondora, the safety of accounts is a priority for us. Our dedicated specialists are working daily to make sure everything is running smoothly and is safe at the same time. 
For example, we’ve implemented a 2-factor authentication process, which is an extra level of security for your account. In short, it means that all account transactions and personal details changes need to be confirmed with an additional security measure, for example, a unique SMS PIN code sent to your registered mobile number. What’s more, money can only be withdrawn to the account holder’s personal bank account after the account is fully verified. These are some of the measures we’ve added to ensure safety. 

Georg: 
For a lender, what is the difference between getting a loan at a regular bank versus a p2p platform? 

Kairi: 
Getting a loan at a bank is a super slow process. You have to use their ancient systems and most likely walk into a physical high street branch to meet with someone to discuss your application. They use primitive credit scoring systems which favor only those in the prime category. The process takes weeks. With Bondora, we give you the best possible loan offer within 60 seconds. All online, 24/7, and on any device. 

Georg: 
What are your expansion plans for the next 2-5 years? 

Kairi: 
Our long-term goal is to be a platform that is used by millions in Europe, so within the upcoming years, we will significantly grow our user base. To get there, we plan to improve our products even more, making them easy to use and accessible using the latest technologies. Most importantly, Bondora will continue to build more trust and make sure to keep our promises to our customers. Within the next 2 years, we are considering expanding into 3 new loan markets within Europe. More information to come on this next year. 

Video of office tour with Temi from Bondora

After the interview with Kairi, another member of the Investors Relations teamTemmy, was so kind to give me a tour of the Bondora office, where almost everyone are wearing the cosy blue Bondora hoodie. It is very clear that even though everybody is working hard, it is an environment where employees can feel relaxed and part of a family. See the video of the office tour below and subscribe to my Youtube channel to see even more videos about crowdlending, p2p-investing and fintech.

Which is the better product - Bondora Go & Grow or Mintos Invest & Access?

Since the start of August 2019, I have been comparing the Bondora Go & Grow product with the similar product Mintos Invest & Access in terms of returns and liquidity. Both these products are popular with investors who prefer to keep everything as simple as depositing into a savings account. You can always see the updated status of this battle on the My Crowdlending Portfolio page. 

Final thoughts about Bondora

Bondora was my first crowdlending platform and even though I am, at least for now, no longer using Portfolio Manager and Portfolio Pro, Bondora Go & Grow will most likely always stay part of my portfolio. I actually think that specifically the Go & Grow product is Bondoras real strength today, and with 2/3 of the total investor portfolio in Bondora Go & Grow after only 20 months since the product launch, compared to the 10 years in operations for Bondora, the numbers speak for themselves. This was the product that investors had been waiting for. Combined with one of the longest track records out there, I see this as a really solid product and platform. For instant liquidity, 6.75%* is a pretty good return for such a simple and completely passive investment. You could argue that you can get the same return investing in stocks, but stocks are pretty expensive these days and if stock prices goes down you may not want to liquidate even if you planned to spend the money at a certain point. Another benefit at Bondora is, that you can start investing with as little as 1€. If you sign up using the green button below you will get a 5 € bonus added to your account, right after you sign up! 

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Have you already invested with Bondora? What do you think of the Bondora platform? Are you thinking about signing up? Have you invested on other platforms? Are they better or worse than BondoraPlease leave a comment or any question you have below. If you know someone who would like to get started investing or is already investing, feel free to share using the social media sharing buttons below. 

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