Envisioning the future of financing with Minterest
Founded in 2016, Minterest is a leading non-bank fintech group in Singapore, focused on bringing financial inclusion and empowerment to both borrowers and investors. Minterest operates a MAS-regulated crowdfunding platform that helps corporate borrowers raise funds quickly and efficiently, connecting them to a pool of investors through technology. Separately, it also operates a consumer lending platform via QianNow, which offers personal loans at customised interest rates. As a team, the group holds more than 100 years of experience, with expertise in areas across banking, finance, management consulting, legal and information technology.
Recently, it was announced that ARA Asset Management Ltd (ARA), together with Mr. John Lim (via JL Family Office), have jointly acquired a majority stake in the Minterest group. ARA has some of the world’s leading investors, including CK Asset Holdings, The Straits Trading Company and Warburg Pincus as its shareholders. Combining ARA’s strong real estate experience with Minterest’s robust crowdfunding platform, Minterest will be unlocking a new investment class to offer quality institutional-grade real estate investment opportunities for retail investors.
Innovations in fintech
Safeguarding the interests of its investors, Minterest has in place a robust credit assessment and loan matching process system. The system brings speed to the lending process as the platform is able to process and approve loan applications within 48 hours, upon full submission of necessary documents. Thereafter, the offer is launched on Minterest’s online platform for investors to invest in. 87 per cent of transactions are closed within a day, with 50 per cent successfully funded in under 5 minutes.
“MintGrade refers to our in-house rating system which assigns a grade (between AA to E) to each loan that is listed on our platform. It is a data driven model that assesses a borrower’s ability and willingness to repay loans using a pre-determined set of parameters.”
“We developed this algorithm to assess the creditworthiness of a particular loan and its borrower. This will enable us to price the loan appropriately, with a value that is commensurate with the credit risk. It acts as a barometer for how well a loan will perform. This is the most important part of the process as we need to ensure that only creditworthy loans are offered to our platform investors,” expressed Ms Charis Liau.
As a financial services provider first and foremost, the group ensures that clients are provided with sound financial advice when they seek for funding options. The incorporation of technology serves to speed up the turnaround time for loan requests so that SMEs are able to get a credit decision quickly. This is in comparison to conventional financial institutions that could take up to weeks or months for approvals.
Having gathered a pool of data from its 3 years of operation, Minterest has plans to develop and introduce machine learning and artificial intelligence to its credit assessment processes. Such tools will enable the group to further refine and predict demand and supply aspects of the business. It will also allow Minterest to manage its business and clients with renewed confidence, providing them with enhanced services that promise a rewarding and seamless experience.
Financing amidst a global pandemic
The COVID-19 outbreak has sent shocks through the world economy, threatening consumption and tourism, and undermining business sentiments. As a result, many SMEs in Singapore are facing deteriorating business conditions and hence, short-term liquidity crunches.
“To tide businesses through this challenging period, we have teamed up with the SME Help Fund to process loan applications quickly. By providing a lower cost of borrowing and quicker access to funds, it aims to help SMEs with short-term financing while longer-term financing solutions are sought,” said Ms Liau.
To manage credit risks, the group has taken into account the heightened risk in its credit assessments, conducted reviews of its credit processes and increased portfolio monitoring. The group has also brought on board a seasoned credit risk professional who has had experience in implementing credit processes during multiple financial crises. With the expertise, Minterest would be able to advise borrowers on loan structuring and investors with risk mitigation and diversification.
“We understand that this is an unprecedented time that has disrupted the business operations of many businesses. As such, we try our best to assist SMEs that have requested for a deferment of repayments. This is especially so for those that have a good business model and were doing well prior to the pandemic.”
“We facilitate the restructuring by advising our platform investors on the situation and seeking their understanding. I am glad that our investors do understand this very difficult situation and have been accommodating to the deferments. It is this trust that our investors have placed in us, as they recognise that our actions are taken to ensure that both borrowers’ and investors’ interests are balanced and aligned,” shared Ms Liau.
When asked to offer advice to SMEs, Ms Liau recommends that businesses conserve their cash flow during this time and to tap on the various government schemes available. If the business can continue operations, be it online or offline, to try and do so as much as possible. It is also suggested that businesses relook their business models and supply chains to see if they can adapt and retool the business to emerge stronger after the pandemic.
Opportunities in the financial services sector
ASEAN has the third largest population in the world, with 650 million people living across 4.5 million square km of land mass area . Minterest recognises that there are approximately 39 million underserved micro and SME firms, thus representing a credit gap of USD175 billion . As an area of untapped potential, the group hopes to see a transformation of the economic bloc through the utilisation of technology within the financial services sector.
“COVID-19 has forced many companies and consumers to adopt online digital technologies. The future of lending will be defined by the development of technology within the sector that best meets the needs of consumers and businesses in terms of speed, user experience and efficiency. As open banking and standards develop, security will become of greater importance in order for third parties to safely and securely access customers’ account data.”
“Furthermore, I see a greater adoption of artificial intelligence, machine learning and advanced analytics tools to provide customers with more insights about their spend, account aggregation and income. This benefits consumers as it gives them more options and control in their financial lives,” added Ms Liau.
Through its partnerships with ARA Asset Management (ARA), JL Family Office and Straits Real Estate, Minterest will be launching a series of new investment opportunities in a new asset class – premium real estate investment. Retail investors can now invest alongside reputable and established institutional real estate fund managers at bite-sized amounts, allowing portfolio diversification whilst earning higher risk-adjusted returns.