P2P Investing


How Peer-To-Peer Lending Supports Financial Inclusion

Financial inclusion is increasingly becoming a buzzword in the finance arena. While crucial in setting a strong foundation for development, the Southeast Asian (SEA) region and the world still has a lot of room for improvement. This is where Peer-to-Peer (P2P) lending can step in to steer the money lending economy in the right direction.

Why is financial inclusion important?

Financial inclusion refers to people and businesses having access to affordable and useful financial products and services, delivered in a sustainable manner. This can include access to transactions, payments, credit, savings, and insurance, just to name a few.

A crucial foundation

Financial inclusion is important as it contributes directly to the ability of communities to develop and grow. It equips people with the tools to manage their wealth by having savings and enabling the allocation of resources to various aspects of their lives such as health, education, and business. According to the American Economic Review, financial inclusion can aid in the reduction of poverty through an increase of one’s income potential and asset-building capabilities. Financial inclusion also acts as a safety net to let companies survive financial emergencies through business loans.

The state of financial inclusion in SEA

Despite the importance of financial inclusion, many individuals and businesses still lack access to quality financial services. Global Findex Database found that 1.7 billion people worldwide do not have access to basic financial services, like a bank account. Deloitte reported that less than 60% of Small Medium Enterprises (SMEs) in Indonesia, Malaysia, Philippines, Singapore and Thailand have access to bank loans as a means of financing. Shockingly, the region around us continues to use personal funds as a dominant source, particularly in Indonesia.

The reality is that SMEs’ financial requirements are more often than not too large for microfinance, yet too small to be effectively served by corporate banking models. As such, there are many underserved companies with poor access to mainstream financial services and need to rely heavily on alternative financial services.

How does P2P lending support financial inclusion?

The presence of financial exclusion reveals a potential market for lenders. In particular, P2P lending can help address the issue of accessibility while providing an alternative form of investment.

Accessibility upgrade

P2P lending brings lenders and borrowers in direct contact through a common platform. By skipping traditional financial institutions through a convenient digital platform, the P2P lender is able to enhance access to much-needed working capital. Lenders and borrowers are not bogged down with the same degree of bureaucracy and regulation imposed by traditional credit providers, and other measures of assessing creditworthiness are in place. Instead of waiting for a week to process loan applications, a more immediate relief can be provided through P2P lending for business emergencies in the form of SME loans, bridge loans, invoice financing, and more.

Viable investment opportunity

On top of the improved access to funds, P2P lending also adds more options to the pool of investment types available. As opposed to a large starting capital of $10,000, P2P lending allows easy entry with affordable options starting from $20. New and seasoned investors alike can look forward to diversifying their portfolio through this form of alternative investment.

In this digital age, there are lesser excuses for financial inclusion to remain problematic. Banks and Fintech businesses need to ensure that the underserved community is not left behind. P2P lending has the potential to reinvent the funding sphere.

Read Also: Step-By-Step Guide To Investing With Funding Societies In 2019

Step-By-Step Guide To Investing With Funding Societies In 2019

Are you interested to start investing in SMEs with us but have no idea how to start? We have created a step-by-step guide to facilitate your sign up process.

Step 1: Create your profile on our sign up page.

Step 2: Upload a scanned copy of the relevant documents for investor application

Singapore Citizen and Permanent Resident Foreigner residing locally or overseas
NRIC Passport + Proof of Residential Address*

What can be used as Proof of Residential Address?

Utility bills, credit card/bank statement, letter from government bodies or landline telephone bill which are not older than 3 months can be used as Proof of Residential Address. Kindly note that bills for mobile plans are not accepted.

For non-Singaporeans residing overseas holding an overseas bank account, you may also upload your Bank Statement to serve as your Proof of Residential Address

Step 3: Fill up a quick 5 minutes Subscription Agreement

You will be directed to fill up a quick 5-minute form relating to your personal information and your source of wealth.

Complete a General Questionaire about your Investment Profile

Fill in your bank details

Step 4: E-sign the Subscription Agreement

We will then email a Subscription Agreement by the next business day for e-signing.Ensure that all details are correct before electronically signing the Subscription Agreement. If any changes are required, reach out to us to amend the agreement immediately. Please note that your documents can only be legally reviewed once you have signed the agreement. Just follow the yellow arrow which will direct you to the 4 fields that you have to fill up!

Step 5: Transfer a minimum of S$500 to our escrow account

Once the due diligence process by our escrow agency has been completed, transfer a minimum of S$500 to our escrow account (account details will be provided on the Deposit page).

Remember to upload the transaction receipt, which should show your account number, our escrow account number and the amount transferred.

Read More: What Is An Escrow? How Does It Work?

Note: The requirement to transfer a minimum of S$500 only applies for the initial deposit. For subsequent transfers, there is no minimum amount required.

Step 6: Start investing with us

We will confirm the deposit and activate your account by the next business day. When your deposit has been confirmed, you can begin investing with us. To invest and monitor your portfolio on the go, download our investor mobile app! Available for Android and iOS users.

Get in touch with our friendly CX team here if you have any questions regarding your signup process.

Top 5 Investment Articles That Singapore Investors Should Read In 2019

The good thing about investing is that there’s never a lack of new things to learn. No matter how experienced you may be, you can always look forward to understanding different asset classes, new tools, or investing concepts.

To help you in your journey of self-improvement as an investor in 2019, here is our  list of our top 5 P2P investment-related articles that you may find useful, covering a wide range of topics from P2P lending to loan fact sheets.

#1 An Overview of P2P Lending in Singapore

If you have ever considered venturing into alternative investment options such as peer-to-peer (P2P) lending, then “An Overview of P2P Lending in Singapore” is the article for you.

This article provides a closer look at the important components of P2P lending such as its risk, returns and opportunities. P2P lending is an alternative financing option for businesses to obtain funds without traditional financial institutions. It has been growing rapidly in the past few years and has quickly become a new way for investors to diversify their portfolios. Find out how P2P lending serves both the needs of SMEs and investors.

#2 Why a Loan Default Does Not Mean a 100% Principal Wipeout

A guest post by an avid user on Crowdfund Talks discusses “Why a Loan Default Does Not Mean a 100% Principal Wipeout”.

This article discusses the two most asked questions by investors regarding defaults on P2P loans, namely “If a loan defaults, will I lose 100% of my principal?” and “When a loan goes into default, is it non-recoverable?”. If these questions have ever crossed your mind, you should hop on over to the article to learn more about his perspective on these issues.

#3 Understanding The Loan Fact Sheet

One of the key steps to becoming an investor on Funding Societies is to understand the loan fact sheets provided on the businesses you can potentially invest in. “Understanding the Loan Fact Sheet” will walk you through the important information that investors should take note of when considering a new crowdfunding opportunity such as the loan details, repayment schedule and company’s summary, etc.

The loan fact sheet summarises Funding Societies’ risk-based assessment of the business’ creditworthiness, based on key components of the business such as its financials, repayment behaviours, etc. Thorough reviewing of the fact sheet will allow investors to make an informed investment decision.

#4 What is an Escrow? How does it work?

Common concerns of potential investors include: How do investors ensure that their funds will reach borrowers? How is the fund provided protected if the platform goes bankrupt? Well, the answer is escrow accounts, which are used to establish transparent transactions and give you peace of mind. You can find out more here on “What is an Escrow? How does it work?”.

Funding Societies was the first P2P lending platform in Singapore to use an escrow. We engage Vista Trust Singapore, which is regulated by the Monetary Authority of Singapore (MAS).

#5 What You Can Expect When Investing with Funding Societies

Southeast Asia has seen significant growth in the P2P lending landscape in recent years, predominantly spearheaded by Singapore. We have onboarded more than 70,000 investors across Singapore, Indonesia and Malaysia and is the only P2P lending platform to have received the MAS Fintech Award in 2016.

If you are looking to start investing with us, this article  “4 Things You Can Expect When Investing with Funding Societies” helps to summarise the potential returns, user interface and updates you experience on our platform.

Here’s The Best Way To Start Adding P2P Lending To Your Investment Portfolio Before The (Chinese) New Year

We’re in the time of the year when new year’s resolutions have just been set, and plans for the year ahead are in the midst of being  acted upon.

Now is also an opportune time to gain knowledge and add useful skills to your repertoire.

To help you with this, Funding Societies, Southeast Asia’s biggest peer-to-peer financing platform, is hosting a content-packed event to introduce you to the world of opportunities in peer-to-peer financing, and how you Funding Societies can help you find and make investments.

As you know, Funding Societies is licensed in Singapore by the Monetary Authority of Singapore (MAS) and has facilitated more than $365 million in peer-to-peer loans across the region.

Here’s what you can learn:

– Learn about how P2P Lending works for investors
– Understand the risks & returns of this investment type
– Hear first-hand from an SME owner about how your investments benefit SMEs in Singapore
– Sharing by Ming Feng from Seedly on how you can gain personal finance knowledge with the power of community

Date: 24 January 2019
Time: 6.30pm – 9pm
Venue: Lowercase Cafe @ 1 McNally Street (Walking distance from Rochor MRT)

You’ll also receive an exclusive goodie bag AND promotions for you when you attend the event.

Event Information And Registration

There really isn’t a better way to start the year and open the doors of opportunity in 2019. See you there!

If you have any questions relating to this and other events, please email Funding Societies at [email protected]