Differences across EU P2P
Baltics not Balkan
As the EU had to decide the fate of the Balkan joining the EU, most western European countries declined, as the specific countries do not meet the standard requirements EU member states have to adhere too.
Obviously it is a dangerous void, giving the Russians (or the Chinese) the possibility to embrace and take over the area and enjoy the potential economical fruits to come. Clearly we have to aid in getting their standards up to the EU standards and keep the conversation going.
This said it is crazy to see the EU advocate the flow of goods, information, but seeing this halted at (alternative) finance. Still lacking an homogeneous market there are quite some differences in P2P yields offered across the EU.
EU wide differences
The EU together with various commissions have been working hard on creating a framework in alternative finance.
As there is agreement on certain points a homogeneous market seems difficult, as every country in EU has there own P2P rules where also the upcoming ICO market will fall under this P2P/Crowdfunding regulation. In some EU states P2P platforms need to be fully licensed and in others they are ‘supervised’.
Not only is alternative finance in different stages across EU member states, huge differences can be seen in the annualized returns. Obviously this has to do with the loan rate businesses receive from national banks as well as the maturing technological features integrated in the due diligence process.
Looking at Dutch P2P platforms, which are under supervision but not regulated by the AFM (Dutch financial authority) we clearly see a landscape dominated by first movers not being pushed to create a standard as recent research points out Dutch platforms and the financial authority have a different approach of calculating net yield.
EU P2P Passport
Taking into account the differences across member states we have to push for standardization in approaching P2P investing.
What is clearly needed is an EU passport for EU citizens to invest across EU wide platforms and at the same time let EU platforms market and target funders across Europe.
Currently there is a proposal on the table, entailing platforms to reach out and operate across borders for funding up to 1 mio. We consider this as a weak proposal as national legislation lets them attract as much as 8 mio, diminishing the need to attract investors outside.
In the Netherlands platforms only accept investors having a Dutch bank account where as in France many platforms are open up to outside investors. General rules and acceptance will be in place, although a new proposal will have to be on table.
At Yieldport we strive to make it just as easy to drive across the border for EU citizens to invest in EU wide platforms, connecting EU countries with low deposit rates with EU countries with high percentages of loans for businesses.
Next week we will focus on the yield differences across EU wide platforms, as these are enormous.
Whether this has to do with capital requirement for banks, past default rates, the quality of the issuer up until the maturing state of technological due diligence, we will investigate this thoroughly aiding in creating a consistent EU framework to be ready in 2020.
Yieldport, bridging the gap.