P2P lending in Malaysia

A Complete Review of P2P Lending Platforms in Malaysia

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[Last updated: 14 December 2018]

Introduction

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 is the complete review of P2P lending platforms in Malaysia I gonna 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.

Traditional banking process of borrowers requesting loans and investors depositing money
Traditional banking process

 

Peer-to-peer lending process on borrowers requesting loans and investors investing in loans
Peer-to-peer lending process

Click here for better understanding on P2P lending.

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.

No. P2P Lending Platform(s) Operated by
1 Funding Societies Malaysia Modalku Ventures Sdn Bhd
2 Fundaztic Peoplelender Sdn Bhd
3 QuicKash QuicKash Malaysia Sdn Bhd
4 AlixCo FBM Crowdtech Sdn Bhd
5 Nusa Kapital Ethis Kapital Sdn Bhd
6 B2B FinPal B2B Finpal Sdn Bhd

Overview of P2P Lending Platforms in Malaysia

1. Funding Societies Malaysia – Modalku Ventures Sdn Bhd

Funding Societies - P2P lending platform in Malaysia

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 approximately RM974 million worth of loans across the region. It maintains a low default rate of below 1.5% regionally since launch.

2. Fundaztic – Peoplelender Sdn Bhd

Fundaztic - P2P lending platform in Malaysia

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 - P2P lending platform in Malaysia

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 latest update since launch in September 2017.

4. Alixco – FBM Crowdtech Sdn Bhd

Alixco - P2P lending platform in Malaysia

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 - P2P lending platform in Malaysia

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 - P2P lending platform in Malaysia

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

Description Funding Societies Fundaztic QuicKash Alixco Nusa Kapital B2B FinPal
Initial deposit for registration RM1,000 RM0 RM0 RM0 RM0 RM1,000
Minimum investment RM100 RM50 RM100 RM500 RM500 RM100
Maximum investment for individuals RM50,000 Recommended RM50,000 No limit Recommended RM50,000 RM50,000 RM50,000
Financing type Business loan or Invoice financing Business loan Business loan Business loan Business loan Business loan or Invoice financing
Financing tenure 1 - 24 months 3 - 60 months 1 - 24 months 6 - 24 months 2 - 6 months 1 - 6 months
Service fee 0.16% - 2% of each repayment or 15% on interest 1% of each repayment 1.25% - 1.5% of each repayment 1% of each repayment 10% on return 30% sharing on interest
Repayment type Bullet or Instalment Instalment Instalment Instalment Instalment Bullet or Instalment
Investment opportunities High High Medium Low Low Medium
Auto invest option Yes Yes No No No Yes
Mobile application Yes Yes Yes No No Yes

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 a 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 RM974 million 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 annualized return of 13.18%.

Funding Societies performance
So Far So Good!

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 0.92%.

It clearly proves that Funding Societies has implemented due diligence and credit assessment processes effectively. The strong credit control no doubt has boosted the investors’ 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. 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 which may not be sensible to everyone.

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 tips on factors to consider when you’re selecting a P2P lending 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 have a guaranteed return of 5% on day 1.

For those who are interested, you can use this referral link to sign up: Sign up to invest in Funding Societies. RM50 bonus will be credited into both of our accounts if you invest at least RM1,000. Or, you can enter my referral code: jler3bcm to get the RM50 bonus as well. Even if you’re not using my code, that’s okay! Remember to use a referral code so that you won’t miss out the 5% return on day one!

Why I Choose QuicKash?

You may be puzzled as to why I will choose QuicKash to invest in P2P lending. As depicted in the table above, the service fee for QuicKash doesn’t look competitive. And it also appears to be at the higher end as compared to other platforms.

QuicKash also doesn’t offer high investment opportunities. And the interest rates on the investment notes are generally lower. Yes, I know. It contradicted with the main reason on 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.

QuicKash investment note details
QuicKash investment note that I have invested with a principal guaranteed element

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 minimize my risk of investment.

Getting Started with QuicKash

Unfortunately, QuicKash doesn’t offer any referral bonus. But in my humble opinion, it’s still a good choice for investors! For those who are interested, you can click on this link to sign up: Sign up to invest in QuicKash.

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:

Alixco investment opportunities
Alixco’s investment opportunities

Nusa Kapital is not any better. Though the world’s first regulated Shariah-compliant P2P lending platform is a good selling point. As of today, I can’t even access its official website. Probably it has gone out of business.

Fundaztic

Fundaztic is the only P2P lending platform that allows a financing with maturity up to 60 months. But most of the investment notes I’ve browsed through typically range from 12 to 36 months. Fundaztic does offer quite a number of investment notes on its platform.  

Fundaztic investment opportunities
Fundaztic’s investment opportunities

Personally, I’m not comfortable investing via Fundaztic. The main reason is that the tenure of the loans is too long and it doesn’t fit my risk appetite. P2P lending primarily caters the financing needs of the SMEs which typically have lower creditworthiness. The reality is that the sustainability of these SMEs is not guaranteed. 

Having considered the high probability of default as shown above, loans with tenure more than one year no doubt amplifies the risk of default. If you have a higher risk preference, Fundaztic can be one of your options.

B2B Finpal

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.

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 and QuicKash remain my preferred choices. Again, it’s individual preference and it’s really up to you.

The Bottom Line

As a word of caution, investing in P2P lending is certainly not risk-free. The apparent risk is obviously the risk of default by the borrowers. Refer here for better understanding on the risks of P2P lending before you invest.

“In investing, what is comfortable is rarely profitable.”

– Robert Arnott

But you may be surprised that the returns from investing in P2P lending could still be higher than the traditional investments even if defaults by issuers occurs. Because the returns may outweigh your loss of principal in the event of any default. I recommend you read Best Way to Avoid Risk of Investing in P2P Lending Malaysia. You’ll find out the best strategy to maximize your returns at the lowest risk.

In summary, it’s important for you to have a thorough understanding on P2P lending and its underlying risks before you start investing.

If you’ve any questions or doubts, this FAQ on P2P lending may be helpful to you.

4 comments

  1. Dear Desmond,

    I would like to clarify that Funding Societies is no longer command >50% of the market shares.

    Based on the Fundaztic report card 2017/2018, total loan disbursement under P2P operators up to 30 June was RM80.28 mil. Out of which Fundaztic claimed it disbursed RM16.5 mil.

    Based on my knowledge, Finpal has disbursed RM28 mil up to 30 June 2018.

    The above 2 operators have already captured approximately 55% of the P2P market share not to mentioned other operators.

    Regards

    1. Hi Ricky! Thanks for sharing the information. I have updated my post accordingly and included the sources for the loans disbursement amounts for readers’ reference. I supposed Funding Societies had once captured >50% market share but not able to maintain it thereafter.
      https://fintechnews.my/16377/fintech-lending-malaysia/p2p-lending-malaysia-performance/

      Would be great if you could share the source of the Fundaztic report 2017/2018 for the readers as well. Thanks!

  2. Pingback: Why Funding Societies is the Best P2P Lending Platform in Malaysia?
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