Klaus-Martin Meyer: Pärtel, Bondora is known for its innovative approach. What is happening at the moment on your platform?
Pärtel Tomberg: This week we start the roll-out of Bondora Ratings, the new credit scoring system that allows for risk-based pricing of loans. Bondora Ratings will enable Investors to better understand and control the risks associated with their investments since every loan will get a rating representing the estimated expected loss range.
At the same time, Bondora Ratings will allow risk-based pricing of the loans, thus, making Bondora loans even more affordable for prime Borrowers.
Klaus-Martin Meyer: What was the motivation to move in this direction?
Pärtel Tomberg: There are two primary reasons for the introduction of Bondora Ratings:
The first reason is that we wanted to bring consistency to the returns that Investors earn when investing on Bondora. Under the current approach, loans are priced based on the credit history and discretionary income of the borrower, rather than the actual risks associated with the particular loan. Thus, two investors may see completely opposite return levels when investing into what looks like the same type of loans, and Bondora Rating will solve the issue by pricing each loan individually.
The second reason is that, as a truly pan-European platform, we wanted to introduce a rating model that works across the borders. Bondora Ratings account for macro-level risks (such as country risk) and reflect it in the pricing of a loan. Thus, when investing on Bondora Investors will not need to think about the origin of the borrowers and focus on what’s important, the return level.
Klaus-Martin Meyer: Are there any further innovations we can expect for the year to come?
Pärtel Tomberg: We expect Bondora ratings to bring consistency to the return levels for Bondora investors, but we are also looking for the ways to increase liquidity of the investments. In particular, we will invest resources into developing further our Secondary Market, so the investors are able to exit their investment at any time. We believe that a combination of our returns levels, consistency of returns that will be brought by Bondora Ratings, and high liquidity through Secondary Market will make investing on Bondora a preferred choice for both private and institutional investors.