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After the financial crisis of 2008, the Swiss Franc interest rate level dropped drastically. Therefore, NSF Wealth Management started looking for alternative investment opportunities - but it was not an easy task. So NSF came up with the idea of lending within their professional client structure, which gave borrowers access to attractive loans and lenders access to interesting returns. Thus the idea of Private Debt at NSF was born, and a little later an investment fund was launched with this concept within the company's own professional customer structure. A win-win situation for investors and borrowers. But that was not enough.
Marketplace Lending: A first attempt
In 2016 the idea of a Marketplace Lending Fund emerged, which was going to invest in German SME loans. However, it soon became apparent that the implementation was not as easy as with the first Private Debt fund. The number of the targeted loans was to be much higher and their sizes to be much smaller. In addition, marketplace lending platforms were to be involved. During the conception of the fund, it was quickly established that the platforms and their lending modalities were very different. This heterogeneity was especially noticed in the interest and repayment terms as well as in the risk calculation and assessment. Thus, it was almost impossible for the project to invest across platforms and to analyze the huge amounts of data; i.e. to measure and monitor return calculations, late payments, cash flows, and other KPIs. A scalable solution was therefore hardly possible, i.e. the associated administrative effort could not have been managed economically - whereupon the project was put on hold. |
Marketplace Lending: The second attempt
Later in time and by chance we got connected to Gregor Stadelmann, CEO of i2 group, in June 2020. A LendTech startup from Zug, which develops a software solution that allows professional investors to invest across marketplace lending platforms, according to different investment criteria. Furthermore, their software solution standardizes the data from multiple platforms and allows for efficiently monitor each individual and all loans and their cash flows.
This was reason enough for NSF to revive the project, which had previously been put on hold. So together with Gregor Stadelmann and Marco Müller from i2 group, as well as the custodian bank, the idea of a Marketplace Lending Fund was reborn.
Later in time and by chance we got connected to Gregor Stadelmann, CEO of i2 group, in June 2020. A LendTech startup from Zug, which develops a software solution that allows professional investors to invest across marketplace lending platforms, according to different investment criteria. Furthermore, their software solution standardizes the data from multiple platforms and allows for efficiently monitor each individual and all loans and their cash flows.
This was reason enough for NSF to revive the project, which had previously been put on hold. So together with Gregor Stadelmann and Marco Müller from i2 group, as well as the custodian bank, the idea of a Marketplace Lending Fund was reborn.
A symbiosis of asset management and LendTech
During the implementation, it became clear that the team of i2 group would be a valuable key partner in this project. Not only because of the software solution but also because of their know-how and their specific and long-standing experience in this area.
NSF's first step was to analyze the Swiss SME Lending market in Switzerland and Liechtenstein to develop an investment strategy.
The goal of the investment product was to create an alternative investment opportunity in the private markets sector with attractive and steady returns in Swiss Francs. The aim is also to achieve a low correlation to the traditional financial markets so that the investment can fit well into any portfolio for diversification reasons.
In addition, it was important for us to offer investors the exclusive opportunity to support small and medium-sized companies in Switzerland and Liechtenstein.
The investment fund supports the domestic SME landscape by providing attractive loans with your investment. SMEs benefit from more attractive interest rates and faster access to credit than established banks. Despite fair interest rates, the returns for investors are above average compared to similar forms of investments with comparable risk.
After the investment objectives and guidelines were developed, the second step was to evaluate marketplace lending platforms. Together with i2 group, various marketplace lending platforms were systematically reviewed and connected to the software solution. During the due diligence of the platforms, various criteria were checked, also reducing the platform risk for the investor. Here the know-how of the i2 group team was very valuable, as they were already in active contact with many platforms and thus had a direct comparison. By working directly with the platforms, they are close to the pulse of what is happening in this area and can therefore react quickly to changes/risks, but also seize opportunities. A few weeks in we had already connected the first platforms to the software solution of i2 group via API interface and the first test transactions were started and successful. We were thus ready. At the launch of the investment product, the platforms Lend.ch, Cashare, and Crowd4cash.ch were connected. Over time, other platforms will be evaluated and integrated if they meet our strict requirements and specifications.
Conclusion: A challenging project with good partners
Together with the i2 group team, we were able to set up a new investment product in the private debt sector and the support of their software solution offers in our view clear competitive advantages over comparable investment products.
i2 group’s software solution allows us to invest in various SME loans in Switzerland across different platforms. During the investment process, the software checks whether the existing loans meet the investment guidelines. For instance, it checks the maturity, risk rating, loan type, loan size, and any collateral - if these and other factors match the investment guidelines, the investment is made automatically.
If loans have already been actively granted, the system automatically checks whether payments for each loan are received on time. The smallest changes can indicate whether the loan portfolio is healthy or whether there are loans that require attention.
This very high level of automation ensures that even with a large number of loans and the corresponding cash flows, the risk is always monitored and clearly displayed in our investment dashboard. Our solution is scalable and the volume effects benefit the investor directly, as it automatically invests in a broadly diversified loan portfolio.
In summary, NSF has long had the idea of launching a marketplace lending product but failed due to scalability and automatization, i.e. data processing. With the innovative software solution from i2 group we were able to develop and launch the dream of an SME marketplace lending product. In our opinion, this is an interesting product that fits well into any portfolio of professional or qualified investors who are looking for constant and attractive returns and at the same time want to be invested in the regional SME landscape.
Have we attracted your interest and are you looking for a new investment opportunity?
We look forward to hearing from you.
