Esketit Interview with CEO Vitālijs Zalovs 2022
Esketit is a relatively new personal lending platform headquartered in Ireland. It offers very competitive interest rates on payday loans from both advanced and emerging markets. We talk to Esketit's CEO to learn more about the platform's business model and market position.
This is a written interview with Esketit. P2PMarketData does not receive statistics data to perform in-depth checks of the information and numbers presented by Vitālijs.
You can learn more about Esketit on P2PMarketData, including our new in-depth analysis.
Platform Story
Esketit was launched in December 2020 by the owners of Creamfinance Group, David Barons and Matiss Ansviesulis. Creamfinance is one of the largest loan originators on Mintos and also the principal partner of Esketit. At the same time, all loan originators on Esketit are either owned directly or indirectly by the founders of Esketit. Why did the team decide to launch its own marketplace lending platform instead of only offering loans on already existing platforms? How did you come up with the name, and what does Esketit signify?
We have understood that with our own platform, we will be able to offer better conditions for investors who are interested particularly in CreamFinance loans and loans that are issued by other companies owned by Founders. With time on top of that, we may add some other investment services – that’s why we understood that using our own platform would be more beneficial for both sides.
Founders have never lost any investors' funds in their 10+ years of experience. We thought that was something that investors would value after the 2020 crisis.
In our opinion, separating ourselves from places where investors have experienced some trouble was a better way to go. Also, all our businesses are currently far away from war-affected places, which helps us.
Esketit name means “Let’s get it”.
Ownership Structure
I can see that Esketit was founded by Creamfinance Group together with VC Flint Capital and Capitec in a Series B equity investment. Are they the sole owners of the platform? Could you elaborate on how the ownership is structured between the partners involved and why Creamfinance Group decided to bring VC Flint Capital and Capitec in as partners?
Esketit doesn't have a direct equity connection with CreamFinance. VC Flint Capital and Capitec are CreamFinance equity investors. Capitec – the largest retail bank in South Africa, is now the strategic equity investor of CreamFinance. Esketit is directly owned 50/50 by CreamFinance co-founders – Matiss and Davis.
Management Team
What is your own background, and how did you become interested in the marketplace lending industry? How did you become involved with Esketit?
I have a financial background, and all my career I have spent in financial institutions. My career started in the bank, then seven years ago, I got to know about investing in loans and joined Mintos. Back then, I already thought that offering investing in loans for retail investors was something new in Europe, and it would evolve – and I was right. Then one day, Matiss and Davis told me about what they were thinking about and willing to build, and that was an interesting next step for my career.
How many employees do you currently have in Esketit?
We have full-time employees and contractors. If we take them all together, we now have 14 employees working on the Esketit project.
Business Model
Esketit focuses on personal lending and has a strong focus on transparency. Why did you focus on this specific business model, and why do you think transparency is essential for a marketplace lending platform like Esketit? Could you mention some of your actions to make sure Esketit is a transparent platform?
As mentioned previously, we think we can deliver better conditions to investors with our own platform.
In our opinion, and from the long experience we have in this business, we see that transparency is one of the key things for investors' decisions. We also see that `transparency` is sometimes misused when someone says that they are transparent, but in reality, they are not.
On our platform, all the key transparency things are addressed:
- Everyone knows who owns the platform, and information can be checked in public resources.
- Information about the management team is available.
- Loan originators publish audited financials.
- In our Telegram channel, every investor can ask questions directly to me.
- We can honestly answer any questions investors have.
Investing
Could you briefly explain what type of investment products you offer at Esketit? How does it work?
We offer to invest mainly in consumer loans issued by CreamFinance and other loan originators owned by co-founders.
Recently we have offered to use Cryptocurrency stablecoins USDT/USDC for deposits and withdrawals, so investors can use those cryptocurrencies for investing.
We also have a loyalty program for investors investing €25,000 and more.
If I decide to place money at Esketit and build a diversified portfolio, how much can I expect in net yearly return after losses and delayed payments?
Up to 14%.
How do you calculate your returns? What method do you use to decide when a loan must be written off and accounted as lost or with minimal chance of recovery? Do you use an objective or subjective way of deciding when to write off loans in the actual returns?
We calculate interest on a daily basis using the interest rate offered for the loan and taking into consideration that year has 365 days.
On our platform, all loans have a buyback obligation. A loan could be written off only if a loan originator would have a problem. A borrower default doesn't affect our investors.
Risk Handling
How do you ensure that the loans listed on Esketit are safe for investors to put money into?
All loans listed on the platform are issued by companies owned by Founders, and they have more than ten years of experience in this business and risk assessment. They have never lost any investors' funds in this time. In their experience, they have developed great scoring models, and they help them to maintain safe and healthy default rates. On top of that, we continuously monitor also the portfolio listed on the Esketit platform and its lateness. Also, the financial stability of all loan originators is being carefully checked.
Jordan loans have very good payment discipline and according to our information payment discipline in the country, in general, is very good.
CreamFinance has set very good procedures for its recovery processes. For example, in most cases, 60 day+ late loans are automatically sold to debt collection agencies in such a way they can much better plan their cash flow and handle buyback guarantees.
A buyback obligation protects all loans on Esketit, and a group guarantee protects some. Could you explain how these guarantees work and how they affect the risk faced by investors?
The guarantee works in a way that loan originators cover defaulted loans for investors. They can do it by having very well set risk assessment and debt collection processes.
For example, as mentioned in the previous question, Jordan has very good payment discipline, and CreamFinace can very well forecast its cash flows.
It is not a secret that borrowers get higher rates than investors' interest rates - that spread also helps to be able to cover this guarantee.
If the unlikely event should occur that Esketit goes out of business, what will happen to the investors' money?
Loan originators and borrowers will owe this money to investors. Loan originators will pay their money as is it defined in agreements.
The future of Esketit
Esketit strikes me as a very ambitious platform. What are your strategy and goals for the coming years? How do you plan to position yourself in the market as a relatively new platform?
We know that the CreamFinance brand is very well known in the industry among people who invest in loans. We want to approach them and also others and let them know that there is a new platform where to invest in CreamFinance loans on more attractive terms.
In our first year, we have proven ourselves as a very good platform for investors. By volume growth, we are in the top 20 platforms in Europe according to P2PMarketData “Last 90 days” growth data, and we don’t plan to stop there. We feel we are as good as other platforms for loans where loan issuance and payments are controlled by the owners of platforms. In the last years, we see that such setups have delivered fewer worries for investors.
We still have many loans to offer, and there has never been a cash drag on our platform.
The average investment of one investor is one of the biggest among all P2P platforms.