NEO Finance interview with CEO Evaldas Remeikis 2023

NEO Finance is a well-established Lithuanian peer-to-peer lending platform that offers personal loans to Lithuanian citizens available for European retail investors. In this interview, you will learn from the CEO Evaldas Remeikis what it means to invest with NEO Finance.

This is a written interview with NEO Finance. P2PMarketData does not receive statistics data to perform in-depth checks of the information and numbers presented by Evaldas.

To learn more, read the NEO Finance Analysis or get a quick overview of NEO Finance on P2PMarketData.

First, could you tell the readers a bit about your background? How did you become interested in working with finance?

I come from a background in information technology. I was studying IT and developing businesses in this sector. Statistically, more than 50 % of tech businesses are created and developed by people who have some kind of IT background.

Currently, with a lot of business experience, I am a board member at various companies. Among my most interesting and significant career achievements is my participation in the creation of successful companies that operate in the technology and finance industry, and investments in startup companies.

NEO Finance makes investments available to retail investors. How do you find and evaluate them?

NEO Finance issues consumer loans to Lithuanian citizens. Most of our clientele is attracted via our effective marketing and ad campaigns. Additionally, NEO Finance has established itself as a well-known juggernaut in the Lithuanian credit industry. Therefore, a significant part of borrowers knows about us even if they have not taken a loan on our platform. Moreover, we are refinancing some of our current clients as well – it shows that we can offer suitable conditions for our borrowers.

The creditworthiness assessment system on NEO Finance is automatic and based on machine learning algorithms. Our managers cannot have a direct influence on the credit rating that is given to a borrower. Our risk assessment system has been developed on years of loan issuance data and track records. The system analyzes more than 30 criteria and the compounds of a borrower, like his or her age, monthly income, liabilities, marital status, and others, to assess the risk of default.

Who can invest at NEO Finance and what characterizes an average investor on NEO Finance?

Natural and legal persons from all over the EU can invest in NEO Finance. Our average investor has a portfolio of EUR 3 900 with an average number of 240 investments on the portfolio. Over 50% of investors on NEO Finance earn more than 10% annual returns after all fees. Additionally, about 30% of investors earn from 5% to 10% annual returns. The average age of our investors is 35-40 years. Currently, more than two-thirds of our active retail investor base are Lithuanians, while we also have a lot of active investors from the Netherlands, Belgium, Germany, and Spain.

Moreover, our investor base ranges from extremely young people (we can even open accounts for children with the supervision of their parents) to very experienced and older investors from all sorts of different personal backgrounds and personal income levels.

Why should the readers choose to invest at NEO Finance?

Whether people like risky or safe investments, we believe that regardless of their risk appetite, everyone wants to choose a reliable investment partner. That is why we aim to be the safest platform in Europe, and it is a sufficient reason why readers should try NEO Finance. 

Firstly, our business model is based on security. We are not interested just in issuing loans but in issuing loans that have the prospect of being repaid. It is in our interest to ensure that every installment is paid and overdue is recovered, because we will only make our profit – when investors do. We allow our clients to open an IBAN account in their own name that they can use for their personal use as well. Therefore, the client’s funds are separated from the company’s funds, and in the unlikely case of NEO Finance defaulting, recovery cannot be directed to these funds. As well, in the event of default, investors have the option of selling their investments to us for 50-80% of their value and we even apply a 100% Buyback Guarantee to A+ rated loans.

Also, we tell our investors they will receive 8-12% annual returns with a relatively low loan default rate. At this moment of the economic situation, we believe that receiving double-digit returns with this kind of low risk is an extremely rare and great opportunity.

It is worth mentioning that the process of investing in NEO Finance is convenient for investors. They can create automatic investment proposals on both primary and secondary markets. Additionally, automatic investments have a significant number of criteria to be selected that allows even very picky investors to be satisfied. Despite this, we always stress the importance of trusting our automatic creditworthiness assessment system which according to historical default statistics works really well. 

Finally, more than 14,000 active investors are also a good reason to encourage readers to invest. The growing number of them every year shows that we have developed a platform that is reliable, user-friendly, and meets investors' expectations.

What sets NEO Finance apart from other peer-to-peer lending platforms?

We were the first P2P platform in Lithuania to have obtained an unlimited EMI license. As I mentioned before, investors should choose to invest in NEO Finance due to the extraordinary safety that we are able to produce. NEO Finance is publicly listed on the NASDAQ First North stock exchange. Due to this fact, we are following strict NASDAQ requirements of providing public financial quarterly and annual reports. Secondly, we have an electronic money institution license and therefore we are highly supervised by the Central Bank of Lithuania (CBL). CBL performs regular inspections of the operations and procedures of NEO Finance. 

As well, we provide investors with investment Buyback service, a liquid secondary market, an exceptional loan recovery track record, also a lot of useful data and reporting that allows them to make impactful investment decisions. The data can mostly be found on our website or in the personal account (portfolio overview) of the client.

How do you decide when a loan is defaulted or with minimal chance of recovery?

The definition of a defaulted loan on NEO Finance is as follows – defaulted loan is an overdue loan of at least 90 days and having terminated the contract with the borrower. After 40 days of overdue, we forward the loan information to our partner Legal Balance who are specializing in loan recovery. Investors do not have to do anything for the loan to be successfully recovered. On average we recover about 70 % of the outstanding principal of defaulted loans 4 years after the termination of the contract with the borrower.

How is NEO Finance regulated?

NEO Finance is supervised by the Bank of Lithuania since 2016 when it was the first in Lithuania included in the list of P2P platforms. In 2017, the company has replaced its limited electronic money institution license with the unlimited electronic money institution license. NEO Finance is the only P2P lending platform in Lithuania that holds the license for unlimited activity and is included in three public lists of the Bank of Lithuania: A list of Peer-to-Peer Lending Platform Operators, a List of Consumer Credit Lenders, and a List of Currency Exchange Operators.

What do you think the future of peer-to-peer lending with personal loans looks like? Which challenges do you see for the industry in the coming years?

I believe that eventually, the P2P lending industry will have more institutional players making a difference. Interest rates will ultimately fall but due to increasing regulation remain at solid levels that would satisfy a substantial part of retail investors. The main challenges for our industry are external – economic turmoil and the geopolitical situation in Eastern Europe. Despite this, we are feeling rock solid in our business model, and the country we are operating in (Lithuania) is NATO and European Union member with strong foundations for businesses like ours.

What’s next for NEO Finance? Where do you see your platform in five years?

We are seeking expansion of our three branches of business. In the consumer loan section, we are already planning to issue about EUR 50 Mio. consumer loans. In the next few years, we are planning to expand to other countries in Eastern Europe and issue EUR 75-100 Mio. worth of consumer loans per year.

Moreover, we expect to attract more institutional investors into our platform as we believe that retail investors will not be able to meet our issuance goals by financing these kinds of sums.