Plata: The Opportunity of Peer-to-Peer Lending

First seen in 2005, peer-to-peer (P2P) lending is quite a new phenomenon relative to the vast history of finance.

This form embedded financing enables the removal of financial institutions as middleman, so lenders can obtain loans directly from other individuals.

It has also been referred to as 'social lending', and has grown a lot in popularity in recent years. Many exciting companies have arisen to meet the growing demand; and Plata is one them.

The twofold opportunity of Plata

Plata, also a lab resident at Copenhagen Fintech, is a sharing economy platform that provides peer-to-peer lending.

The firm offers a twofold opportunity; on one hand, they serve investors who want a return on their money. On the other hand, they serve people who want to refinance existing loans.

- Right now investors have no alternative in the banks in terms of negative interest rates, or no interest rate at all, says Victor Bybjerg Jensen, Head of Marketing for Plata.

Plata isn't a bank, but it connects people with money.

- In the same way that Airbnb connects people with housing, we connect people with loans and money. We provide a platform and the legal framework, the Viktor Bybjerg Jensen says.

- Our platform also verifies that loans have been paid on time. We do this by gaining access to their bank accounts through an API via Aiia. This lets us see, not touch, what's in users bank accounts, Victor Bybjerg Jensen continues.

Plata was selected as among the top 150 tech startups in country by Digital Hub Denmark (video above)

Uses credit rating to verify customers

Plata looks at a variety of factors before accepting borrowers onto the platform.

Firstly, you can't be in an RKI, and you need to be refinancing existing loans. If those two demands are met, Plata looks at other areas:

- We look at your budget like any bank would do, we look at your income, and expenses to create a picture of the borrower, which is then presented to the investor as a credit rating. Credit rating is 1-4 stars - if you're 1 star, you're too bad for the platform, says Victor Bybjerg Jensen.

Vision

According the the Victor Bybjerg Jensen, the Danish loan market is very unbalanced right now.

There's an estimated DKK 1000+ billion in Danish bank accounts that isn't earning interest, and in some incidences is losing value through negative interest. On the other hand there's more than DKK 130B in consumer debt.

- Plata's vision is to create a platform, where everybody can invest their money safely, and gain a positive interest rate while helping others. This would effectively make the interest rate lower on consumer debt, hence balancing the unfair interest rates.

Biggest accomplishments

According to Victor Bybjerg Jensen, all borrowers have met their obligations, and Plata thus hasn't experienced any defaults.

Another big accomplishment is the fact that investors are returning.

- We see investors not coming from one or two loans, but maybe three, four, five loans. Returning customers is a big statement that we're doing something right.

Plata thinks the time is right for more scaling; as such, a greater effort will be placed on marketing in 2022.