[Last updated: 10 January 2019]
The popularity of P2P lending in Malaysia has surged at an exponential pace since its introduction in 2016. To date, SC had issued licenses to six P2P lending platform operators in Malaysia. It’s not surprising that such investment has received an overwhelming response since its debut. Many investors begin to diversify their investment portfolios to include P2P lending as an alternative investment due to its lucrative returns and low entry requirement. A general question that investors would definitely ask before getting their toe wet in P2P lending. “Which is the best P2P lending platform in Malaysia?”. Here’s the complete review of P2P lending platforms in Malaysia which I’m going to share with you after having a thorough comparison of each platform.
What is Peer-to-Peer Lending (P2P Lending)?
Let’s have a quick recap of what is P2P lending. Peer-to-peer lending, also known as P2P lending. It’s essentially giving loans to individuals or businesses through an online marketplace that matches between the lenders and borrowers.
You can refer to the article here for better understanding on P2P lending. Certainly, there’s no such thing as risk-free investment. The most apparent risk of investing in P2P lending is risk of default by borrowers. (Read Understand the Risks of Investing in P2P Lending)
“In investing, what is comfortable is rarely profitable.” – Robert Arnott
The good news is that the risk of default can be significantly mitigated through diversification. And you’ll be surprised that the returns could significantly outweigh the loss of principal in the event of default if your investment portfolio is effectively diversified.
P2P Lending Platforms in Malaysia
There are six licensed P2P lending platform operators in Malaysia. Based on SC guidelines, a P2P lending operator must be incorporated under Companies Act 1965 with a minimum paid-up capital of RM5 million. A P2P operator also needs to put in place a diligent risk scoring system and ensure compliance of the SC approved platform rules. Besides, the operators must place the amounts deposited by both investors and issuers in a 3rd party trustee account before making any disbursement.
Overview of P2P Lending Platforms in Malaysia
1. Funding Societies Malaysia – Modalku Ventures Sdn Bhd
Funding Societies is a Southeast Asia leading P2P lending platform headquartered in Singapore. Kelvin Teo and Reynold Wijaya founded Funding Societies in 2015 while they were studying at Harvard Business School. It serves primarily the SME markets in Singapore, Indonesia and Malaysia. It made its debut in Malaysia in February 2017.
Funding Societies is the first and largest P2P lending platform in Malaysia at the time of writing. It’s also the only P2P lending company featured in the Emerging 50 Rising Stars in the Top Fintech 100 list for 2018. The list is the compilation of the best FinTech innovators from around the world.
Based on the latest update, Funding Societies had successfully disbursed more than RM1 billion worth of loans across the region. It maintains a low default rate of below 1.5% regionally since launch.
2. Fundaztic – Peoplelender Sdn Bhd
A group of prominent ex-bankers and a lawyer founded Fundaztic. It commenced its operations in July 2017. Jeffrey Chew is the founder and Chairman of the company.
Interestingly, he is also currently the Group CEO of Paramount Corporation Bhd, a company listed on the Main Market of Bursa Malaysia. Kristine Ng is the incumbent CEO of Fundaztic. She has years of experience in Credit Guarantee Corporation before taking up her role in Fundaztic.
As of June 2018, Fundaztic had successfully disbursed closed to RM15 million loans to SMEs.
3. Quickash – QuicKash Malaysia Sdn Bhd
QuicKash is operated by QuicKash Malaysia Sdn Bhd. It’s a wholly-owned subsidiary of ManagePay Systems Berhad (ManagePay). ManagePay is listed on the ACE Market of Bursa Malaysia. It’s a provider of end-to-end electronic payment solutions for banks and financial institutions, merchants and card issuers in Malaysia.
QuicKash offers most of the investment notes that come with a principal guaranteed element. It charges the borrowers a guarantee fee for 3rd party guarantee services. Therefore, it minimizes the risk of default by the borrowers and provides the investors with an additional layer of protection.
QuicKash had successfully disbursed loans amounting to RM15.2 million based on the latest update since launch in September 2017.
4. Alixco – FBM Crowdtech Sdn Bhd
Alixco is operated by FundedByMe Malaysia (FBM Crowtech Sdn Bhd). FundedByMe also operates equity crowdfunding platform as approved by SC Malaysia. It’s a Swedish-based company. It also runs a crowdfunding platform in Europe with more than 86,000 investors across 196 countries.
Alixco had successfully raised more than EUR 37 million for 472 companies according to its official website.
5. Nusa Kapital – Ethis Kapital Sdn Bhd
Nusa Kapital is operated by Ethis Kapital Sdn Bhd. It is the world’s first regulated Shariah-compliant P2P lending platform. It was founded by Umar Munshi, the CEO of the company. He’s also the chairman of the Islamic Fintech Alliance.
Besides, the team comprises experienced elites such as former senior World Bank and Barclays Bank executives.
6. B2B FinPal – B2B Finpal Sdn Bhd
B2B FinPal is operated by B2B Finpal Sdn Bhd. It is a subsidiary of B2B Commerce, founded by Dr. Lee Thean Seong. He held a senior management position for Hewlett Packard in Malaysia and Singapore.
As of March 2018, the platform had successfully raised about RM15 million by issuing invoice financing notes. B2B Finpal offers the largest number of invoice financing notes to-date.
Comparison of P2P Lending Platforms in Malaysia
Which is the Best P2P Lending Platform – My Humble Opinion
If you want to get started with P2P lending investment, you may wonder which is the best P2P lending platform for investors in Malaysia. After conducting thorough research and comparison of each P2P lending platform, I am currently using Funding Societies and QuicKash.
Why I Choose Funding Societies?
The most obvious reason is that Funding Societies is the first and largest P2P lending platform in Malaysia. It had successfully disbursed more than RM1 billion in aggregate regionally with a low default rate of below 1.5% across the region.
Below is my portfolio’s performance to date with an annualised return of 13.13%.
1. Low Default Rate & Good Credit Control
First off, I’m pretty sure that you are already aware that the key risk of investing in P2P lending is the risk of default by the borrowers. As such, the default rate of the investment notes offered by any particular P2P lending platform is the most valuable information that you will be looking for.
Funding Societies has a very impressive track record of successfully maintaining a low default rate of below 1.5% since day 1. Based on the latest update, its default rate is only a mere 0.88%.
It clearly proves that Funding Societies has implemented its due diligence and credit assessment processes effectively. The strong credit control has definitely boosted my confidence to invest through its platform.
Funding Societies also secures personal guarantees from the Directors of the issuers in absence of collateral and insurance on the investment notes. The personal guarantees reduce the risk of default by the borrowers.
There’s no risk rating assigned to each investment note, unlike other platforms. Funding Societies provides a qualitative aspect of the investment notes based on its analysis on the issuers. The analysis provides investors with information regarding the Company’s background, historical audited financial information, Director’s repayment records, litigation status, etc.
Therefore, it’s easier for investors to understand the nature and underlying risk of the investment notes. The risk ratings that are made up of alphanumeric characters disclosed in other platforms may not be sensible to everyone. God knows what do all those A, B and C mean?
2. User-friendly & High Investment Opportunities
The platform is very user-friendly. It also has a mobile application with excellent user interface designs. Not to also mention the sign-up process is quick and easy to use for beginners as well.
More importantly, Funding Societies offers high investment opportunities in terms of the frequency of investment notes issued on its platform. This is definitely a BIG deal for me. A simple interest rate of 12% per annum with monthly repayment (principal + interest) is equivalent to an effective interest rate of 21.5% per annum. The effective interest rate is calculated on the assumption that you will re-invest each monthly repayment with the same interest rate of 12% p.a.
It will just be a number on the paper if you don’t even have the opportunity to re-invest! Funding Societies offers sizeable investment notes with high frequency. That gives the investors the opportunities to compound their returns throughout the year.
3. Invest with Ease & Great Convenience
Further, it also allows investors to set up an auto-investment tool. The tool helps the investors to invest based on their requirements in terms of financing type, interest and tenure. You can just imagine how convenient it is to invest in P2P lending using Funding Societies!
If you are interested, refer to this article for a step-by-step guide to invest in Funding Societies. (Read Funding Societies Malaysia Review – Best P2P Lending Platform in Malaysia.) It also includes FREE useful tips on factors to consider when you’re selecting an investment note before investing.
Getting started with Funding Societies
Sign up is free and the minimum requirement to invest in Funding Societies is only RM100. The best part is that it also rewards you for signing up as an investor. You’ll get a free RM50 bonus if you sign up via a referral link and invest at least RM1,000.
RM50 is equivalent to a 5% return on your initial capital of RM1,000. In short, you’ll get a guaranteed return of 5% on day 1.
For those who are interested, you’re always welcomed to use this referral link: Sign up to invest in Funding Societies. Or, you can enter my referral code: jler3bcm to get the RM50 bonus as well.
Why I use QuicKash as well?
Though Funding Societies is my all time favourite, I do hold a small portfion of my portfolio in QuicKash as well. You may be puzzled as to why will I choose QuicKash to invest in P2P lending. As depicted in the table above, the service fee for QuicKash doesn’t look competitive. It also appears to be at the higher end as compared to other platforms.
QuicKash has low investment opportunities and the interest rates on the investment notes are generally lower. Yes, I know. It contradicted with the main reason why I choose Funding Societies. Obviously, I don’t have a stake in QuicKash that compel me to hard sell it to you. The main and the only reason why I choose QuicKash is all about diversification.
The inherent risk of investing in P2P lending is the risk of default by the issuers when they fail to make their repayments on time. The best way to minimize your risk is to diversify your loans portfolio. Refer Best Way to Avoid Risk of Investing in P2P Lending Malaysia.
The beauty of QuicKash is that it charges the issuers a guarantee fee upfront for guarantee services provided by third-party guarantee corporation. It deducts directly from the financing amount. QuicKash claims all investment notes with good credit rating come with a principal guaranteed element. It discloses that the investors will never lose their principal investment amount even if the issuer fails to repay.
Besides, QuicKash doesn’t impose a limit on the investment amount for retail investors. For obvious reasons, I choose QuicKash to diversify my loans portfolio to
Downsides of QuicKash
However, the investment opportunity that QuicKash offers is significantly lower than Funding Societies. You need to be really patient to invest through QuicKash. Also, its interest rates typically range from 8% – 9% p.a. only. In contrast to Funding Societies, it offers investment notes that generally yield 12% – 16% p.a.
Getting Started with QuicKash
Unfortunately, QuicKash doesn’t offer any referral bonus. But in my humble opinion, it’s still suitable for investors who opt for an
Review of Other P2P Lending Platforms
Now, let’s take a closer look at the other P2P lending platforms. And let me explain to you why I’m not using other P2P lending platforms other than Funding Societies and QuicKash.
Alixco & Nusa Kapital
First off, I’ll start with Alixco and Nusa Kapital. I got to be brutally honest with you, these two are never my options. I’ve signed up an account with Alixco, the process is fairly simple and straightforward. But the biggest problem is that Alixco offers extremely limited investment notes with small amounts. Here’s the quick snapshot of the investment notes:
Nusa Kapital is not any better. Though the world’s first regulated Shariah-compliant P2P lending platform is a good selling point.
Personally, I’m not comfortable investing via
Having considered the high probability of default
Though the investment opportunities are not as high as Funding Societies, B2B Finpal offers quite a fair number of investment notes. The only drawback is that the service fee charged by B2B Finpal is relatively higher than the other P2P lending platforms. It charges the investors a service fee equivalent to 30% of the interest earned. Besides, it doesn’t provide such detailed financial performance and other background information like what Funding Societies provides for investors to do their own due diligence before investing.
The other reason why I don’t use B2B Finpal is that it’s very troublesome to maintain my P2P lending investments across too many P2P lending platforms. After comparing all factors such as investment opportunities and credit assessment other than the fees, Funding Societies remains my
The Bottom Line
I was very skeptical about such investment when I first heard about it two years ago. An investment that doesn’t require any
RM100 to get started? More than 10% per annum? It’s no brainer
As an investor, I want to make sure that I understand everything about an investment before I start investing. I want to be well-informed about how it really works, the relevant legislation, underlying risks
I’m pretty sure that’s what you’re doing right now as a rational investor! And I hope that whatever I’m sharing here based on my thorough research and personal experience would be helpful to you.
Many people think that such investment sounds too good to be true. I’m not surprised at all. But with an entry requirement as low as only RM100 with more than 10% return p.a., don’t you really think that it’s worth a try?
What other investment options that are more attractive to you? How has KLCI stock market been doing lately? Fixed deposits? Or, Unit Trusts? It’s all over to you…but I believe that you as a brilliant investor can form your own judgment based on the facts and information available.
If you still have any questions or doubts, this FAQ on P2P lending may be helpful to you.
Download FREE eBook – The Ultimate Guide to Investing in P2P Lending (89 Pages)
The first ever eBook about P2P lending in Malaysia published by The World BizWeek. It includes everything you need to know before investing in P2P lending. Get a FREE copy now!