Seismic Shift for Trustbuddy

The Swedish short-term P2P lender Trustbuddy has announced a sweeping series of changes to the company’s direction.

Trustbuddy has lent a little shy of €190m to date, according to the Liberum AltFi Volume Index Europe (LAVIE). The platform has dealt exclusively in payday style (short-term, high interest rate) loans in order to reach that total. But Trustbuddy is now violently veering away from that mode of lending, stating that its focus moving forwards will centre on long term consumer loans and on SME lending. A new Trustbuddy technology platform, designed to facilitate these long term consumer loans, is slated to arrive towards the close of 2015. The short-term offering will reportedly be transferred over to this newly developed system initially, before being entirely phased out in due course.

What’s the impetus behind this shift?

TrustBuddy’s shareprice has had a rough ride this year. The firm raised €6.8m through a rights issue in mid November 2014 at a share price of SEK 1.20. Its shares closed last night at SEK 0.44, down almost two thirds on the year. TrustBuddy was recently removed from the Liberum AltFi Financial Disruptors Index, as the stock fell below the index’s minimum liquidity requirements.

Furthermore, we recently interviewed Nicholas Sundén-Cullberg – Co-Founder of another Swedish P2P site by the name of Lendify – who portrayed Sweden as a market poised for considerable growth in P2P lending activity, but with trust-building remaining a sizable obstacle. Given the stigma attached to payday lending, Trustbuddy’s shift towards a more sustainable business model may help to bolster the reputation of P2P within the Nordics. 

After all, the listed company has dominated the Nordic alternative lending scene up to now. But Trustbuddy has also extended its footprint further afield. The platform acquired the Dutch lender Geldvoorelkaar and Italy’s Prestiamoci in November 2014. Several months before these moves, Trustbuddy opened its doors to UK borrowers via the acquisition of an unnamed financial services company.

The platform has also declared a shift in its international strategy. In the short-to-medium term, Trustbuddy will re-focus its efforts on Scandinavia, the Netherlands and Belgium. Lending in Poland and Spain (which currently accounts for approximately 1% of the platform’s revenue) will be gradually phased out.

We also received word of a cost reduction program that, once fully implemented, will see a minimum of SEK 4m a month shaved off of the platform’s expenses. Such cuts constitute a reduction in costs of about a third. Increased automation has been cited as the favoured method of achieving these cost cuts, which means a substantial reduction to the size of Trustbuddy’s workforce. The transition to higher levels of automation is set to conclude in Q4 2015.

Simon Nathanson, Chairman of Trustbuddy AB, offered his take on the company’s direction:

“There is a substantial need for restructuring in order for TrustBuddy to become more efficient in its operations. After working actively with the company management, I am certain that the new strategy will pave a very positive future for the group. Through our strong position with our operations in the Netherlands (Geldvoorelkaar), I am certain we will position ourselves as a leader within SME peer-to-peer lending in Northern Europe.”