Funding Societies is one of the six licensed P2P lending platforms regulated by Securities Commission Malaysia. A typical question that you would have for sure before investing in P2P lending. “Which is the best P2P lending platform in Malaysia?” In my earlier post, I shared a few reasons why Funding Societies and QuicKash are my preferred ones. (Read A Complete Review of P2P Lending Platforms in Malaysia). Today, I will give you a deep dive on WHY Funding Societies is the best P2P lending platform in Malaysia. Also, I gonna share with you a step-by-step guide and useful tips to invest in P2P lending using Funding Societies. First off, let me walk you through a comprehensive review of Funding Societies.
Who is Funding Societies?
Before getting into the main topic of the day, let’s have a quick overview of Funding Societies’ background.
Kelvin Teo and Reynold Wijaya founded Funding Societies in 2015 while they were still studying at Harvard Business School. Funding Societies made a successful launch in Singapore and Indonesia respectively before its debut in Malaysia in February 2017.
Funding Societies is now a leading Southeast Asia P2P lending platform headquartered in Singapore. It serves primarily the SME markets in Singapore, Indonesia and Malaysia.
As of today, Funding Societies had successfully disbursed approximately RM928.5 million worth of loans across the region. It has also maintained a low default rate of below 1.5% regionally since its launch.
5 Reasons Why Funding Societies is the Best P2P Lending Platform in Malaysia
1. Proven Track Record
The popularity of Funding Societies has surged significantly since its launch in 2017. The most obvious reason is due to its proven track record of success in the P2P lending industry. It’s the first and largest P2P lending platform holding a dominant market position within the industry in Malaysia.
In a short span of time, Funding Societies has established a strong foothold with the following notable achievements:
July 2017 – Funding Societies is the only P2P lending company from Southeast Asia included in the Prestigious Fintech 250 List.
October 2017 – Funding Societies wins Global SME Excellence Award from United Nations’ ITU Telecom Unit.
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 a compilation of the best FinTech innovators from around the world. Funding Societies had also successfully raised $25 million in Series B funding led by Softbank Ventures Korea in 2018.
Besides, Funding Societies also entered into strategic collaboration and partnerships with RHB Bank, Curlec and MoneyMatch to increase its market share as well as to streamline its business operations.
P2P lending was likened to a pyramid scheme and has drawn much skepticism from all quarters when it was first introduced in 2016. The credibility of a P2P lending platform is more important than ever to gain trust from the investors. The success story of Funding Societies has busted the myths surrounding P2P lending in Malaysia.
For me as a rational investor, no doubt it has boosted my confidence to make my first move in P2P lending investment.
2. High Investment Opportunities
Funding Societies is the go-to alternative for SMEs seeking for business loans due to its strong presence in the industry. As a result, it has the highest investment opportunities among the P2P lending platforms.
What’s an investment opportunity in P2P lending?
Imagine now you’ve RM1,000 cash to invest in P2P lending. And you’ve chosen a P2P lending platform XYZ. You’ll be holding the cash without any returns if there’s no borrower raising funds through the platform.
Why is it important to have high investment opportunities?
Imagine now you’ve invested RM5,000 in an investment note with 10% simple interest and 12 months maturity. You’ll get 12 equal monthly installments of RM458.33 (principal + interest). If XYZ has only 1 investment note throughout the year, you’ll only earn 10% return on investment.
In contrast to another scenario where XYZ has investment notes every month with similar loan terms. And you re-invest your RM458.33 repayment every month. Instead of 10%, you will get a much higher return of 17.97% p.a.!
That’s the difference between simple and effective interest.
The effective interest rate will just be a number on the paper if you don’t even have the opportunity to re-invest! Funding Societies offers high frequency and sizeable investment notes. That gives investors the opportunities to compound their returns throughout the year. Therefore, Funding Societies will be the best choice if you wish to maximize your returns investing in P2P lending.
3. Low Default Rate
There’s a common myth where many investors think that there’s a lack of credit control in P2P lending. This is clearly not the case. Funding Societies has maintained a low default rate of below 1.5% across the region since day 1. At the time of writing, the default rate is only a mere 0.96%.
It’s considerably very low as most SMEs seeking for alternative financing have lower creditworthiness due to lack of credit history. In other words, the borrowers’ due diligence and credit assessment processes in place are working effectively.
Interestingly, Funding Societies doesn’t assign a risk rating to each investment note, unlike other platforms. It provides commentary disclosures about the potential risks of the investment notes based on the in-house analysis. Funding Societies also provides information about the Directors’ credit strength, company background and litigation exposure if any.
It gives the investors a clear perspective to help understand the nature and underlying risks of the investment notes. It’s more helpful to me as compared to those risk ratings that are made up of alphanumeric characters. God knows what those A or B or C mean?
4. User-friendly and Great User Experience
Funding Societies’ platform is very user-friendly even for the beginners. It also has a mobile application with excellent user interface designs. Besides, your investment portfolio and account details are always accessible 24/7.
Funding Societies auto-calculates the income and expenses for your investment portfolio. You can find out your portfolio’s performance anytime at a glance.
Further, you can also browse through all the available investment notes together with the investment factsheets. Funding Societies will notify you whenever there’s a new investment note. So that you can invest anytime, anywhere with just a click of a few buttons using the mobile app.
Besides, the sign-up process is very fast and straightforward. (We will get into details later.)
5. Convenient and Easy to Invest
Funding Societies also offers an auto-investment tool to the investors. You can preset your preference on the amount, types of financing, interest rate and tenure using the auto-investment tool.
The tool will help allocate your money to the investment notes that match your requirements. Funding Societies will notify you when your money is allocated to any particular investment note. So that you still have a choice to opt-out before the investment note goes live.
The auto-investment tool makes everything easy and convenient for those with never-ending busy schedules. It’s kinda cool, isn’t it?
Other Tidbits About Funding Societies
Funding Societies has also set up a community – Crowdfundtalks for all investors. Investors can discuss and share their experiences of investing in P2P lending. You can always ask questions and find answers to your burning questions about investing in P2P lending through Funding Societies.
On top of that, Funding Societies also rewards you for signing up as an investor. If you sign up via a referral link, Funding Societies will credit a FREE RM50 bonus into both the referral’s and your account when you invest at least RM1,000.
If you are interested, you can sign up via this link: Sign up to invest in Funding Societies. Alternatively, you can also enter my referral code: jler3bcm to get the RM50 bonus.
RM50 is equivalent to 5% return on your initial investment of RM1,000 on day 1. More importantly, it doesn’t cost anything for you to sign up!
Summing-up on the Review of Funding Societies
After looking at the nitty-gritty and comparing all angles against other P2P lending platforms, I definitely vote for Funding Societies as the best P2P lending platform in Malaysia.
I hope the review of Funding Societies above help you get the feel of what’s it like investing in P2P lending. Of course, there’s no risk-free investment. I would recommend you read Understand the Risks of Investing in P2P Lending before getting started.
But you can always start with the minimum requirement of RM100 to familiarize yourself before getting serious about it.
Next, I gonna share with you a step-by-step guide to invest in P2P lending using Funding Societies. If you feel like kick-starting your P2P lending investment with Funding Societies now, read on…
A Step-by-Step Guide to Invest in P2P Lending via Funding Societies
Simple Steps to Sign up
Firstly, click on my referral link – Sign up now to access the Funding Societies platform.
After you click “Sign up now” button, it will lead you to the following page. Key in the following details:
a) Full Name as per IC/Passport
b) Email address
c) Set account password
d) Mobile phone number
Once done, it will lead you to the next page and you’ll need to key in your personal details:
c) Residential address
d) Citizenship & NRIC number. (For non-Malaysians, you’ll need to key in your passport details)
You’re almost there! Last but not least, you’ve to upload your national card ID front and back (passport for non-Malaysians) for account verification.
Sign up complete! Now you’ve to wait for Funding Societies to verify and approve your account registration. It only took me less than two days.
How to Start Investing in P2P Lending?
Account approved? Awesome! Let’s get started with your first P2P lending investment. Once you logged on to your account via Funding Societies, you’ll be able to see the overview of your account.
Go to investment opportunities. You’ll see all the available investment notes on the platform. Choose the financing type that you want to invest. Either business term financing or invoice factoring. (Refer FAQ here to understand the difference between the two.)
Before you invest, click on the PDF icon at the top right corner. That’s the investment factsheet. It’s HIGHLY advisable to read the factsheet to find out everything about the investment note before you invest.
Here’s a sample of the factsheet. I’ll break it down into three parts and share with you what are the important factors to consider.
1stPart – Investment note characteristics
The first part comprises the general details of the investment note including the financing amount, investors’ net return and repayment schedule.
Free Tip #1:
There are two types of repayment methods – bullet repayment and monthly repayment. For bullet repayment, you’ll only receive interest every month and the principal will only be repaid at the maturity date. In the event of any default, you’ll sustain higher losses as compared to an investment note with monthly repayment method. Because for the monthly repayment method, at least you’ll get back a portion of your principal on a monthly basis on top of the interest earned.
Free Tip #2:
You should also pay attention to which industry the borrower is operating in. Some industries tend to have higher risks than the others. For example, construction companies may not be favorable during times when the Government reduces capital expenditure.
2nd Part – Company’s and Director’s information
The 2nd part consists of the background information of the company and its Directors like payment history, litigation, etc.
Free Tip #3:
A long-established company has a lower business risk as compared to a new start-up company.
Free Tip #4:
A company with ongoing litigation cases typically has a higher risk of default.
Free Tip #5:
Company and its Directors with bad repayment records will expose you to a higher risk of default.
3rd Part – Historical Financial Information
Last but not least is the historical financial information of the company. Generally, it includes the audited financial information and also the current year management accounts. Besides, the information on bank balances based on the latest bank statements are available as well.
Free Tip #6:
A company that has been consistently making losses for the past few years has a higher risk of default as compared to a profitable company.
Confirm Your Investment
Once you’ve decided on any particular investment note to invest, you need to key in the amount and confirm your investment.
“TADA!” Congratulations! You’ve made your first investment in P2P lending.
You can download Funding Societies mobile application from the Playstore/App store. It’s very user-friendly and you can invest anytime with just a click of a few buttons.
Also, I recommend you read Best Way to Avoid Risk of Investing in P2P lending. You’ll learn the strategy to maximize your returns at a lower risk from investing in P2P lending.
Just in case you don’t remember, always sign up an account using a referral link – Sign up now. Or enters a referral code: jler3bcm to get the free RM50 bonus.
Even if you’re not using my referral link, that’s Okay! Use others’ referral links. Just don’t miss the chance to get a bonus 5% guaranteed return on your investment on day 1!
My Two Cents
P2P lending in Malaysia has been growing at an exponential pace since its emergence in 2016. The most obvious reason is because of its promising high returns with more than 10% per annum. Also, neither it requires specialized financial knowledge, nor it needs day-to-day monitoring.
Many people may take it with a grain of salt, thinking that such an investment scheme sounds too good to be true. I’m not surprised at all.
Frankly, I was really anxious in the first few months of investing in P2P lending. “What if I don’t get back my money?” “What if it’s a scam?” These questions were floating in my mind every night. But after I received my repayments for months while looking at the numbers, I was grinning to myself.
With an entry requirement as low as only RM100, don’t you really think that it’s worth a try? Do you want to brush it off as an investment alternative just like that without getting a better understanding?
What other investment options that are more attractive to you? How has KLCI stock market been treating you? Fixed deposits? Amanah Saham Funds? Or, Unit Trusts?
It’s now all over to you…I’m no expert in investing. But I believe that you as a brilliant investor can form your own judgment based on all the information available. And make the best of any present investment opportunity. Especially when every piece of information including the historical results and actual data are all easily accessible at your fingertips!
If you’ve any doubts or questions, the FAQ on P2P lending here will be helpful.