Interview with Denis Ustjev from Maclear

Introduction

Welcome everyone, today we have an exciting interview with Denis, the CEO of the P2P lending platform, Maclear. Maclear is a unique platform based in Switzerland, and we will be discussing its inception, its benefits for investors, and its future prospects. So, without further ado, let's dive right into this interview.

Could you introduce yourself and your company, Maclear?

Hi Marco, it's a pleasure to talk to you. I'm glad to introduce our Swiss-based lending platform, Maclear, and our team. I'm a co-owner and one of the directors of the company. I have extensive working experience in the banking and financial sector accumulated over the past seven years. I've worked in senior management positions in multinational companies, and I've seen the difficulties and unnecessary complications connected to traditional banking financing. This is especially true for small and medium-sized companies. 

The access to banking capital is very formalized, conservative, and strict. It's time-consuming and not really feasible for relatively fresh companies, even those with well-established business activity and steady growth. So, I proposed to my partner Alexander the idea of a transparent, sophisticated Swiss lending platform that would connect Swiss investors with a wide range of Europe-based businesses. Our potential borrowers are looking for additional finance and opportunities. We are more flexible and customer-oriented than traditional financial institutions, and we provide a full set of measures for proper risk assessment and mitigation, protecting our investors and ensuring comfortable conditions. We have a strong international team of professionals who bring additional value and confidence to the company.

What motivated you and your partners to create Maclear?

Firstly, I was very motivated to grow personally and extend my boundaries. I wanted to utilize my previous practical experience and knowledge in the financial sector. Combined with my ambitions, we, together with Alexander, saw the potential in crowd financing and decided to establish our Swiss entity for this purpose. This is an emerging market segment with great potential for the upcoming years, where we definitely want to participate. 

Back in 2020, we chose Switzerland as the home residence for our company due to its stability, reputation, proper and reasonable regulation, transparency, and additional tax advantages. We want to propose to our Swiss crowd investors efficient access to a variety of EU-based growing businesses, our potential borrowing projects. This would enable them to invest safely and transparently, considering the risks and proposed profitability, also diversifying their investment portfolio and not only concentrating on the Swiss internal market. We propose to our investors only carefully assessed and verified borrowing projects, which demonstrate sustainability and real potential for further growth. A very important aspect for us is to gain interest and confidence from the investor community. That's why we put a special emphasis on guarantees and additional collateral to secure the loans and their payment schedules.

How is Maclear different from other platforms?

In the current highly competitive market of online lending, it is really hard to distinguish nuances and crucial differences among dozens of participants. I don't really want to discuss the strengths and weaknesses of our competitors, but let me try to explain our competitive advantages as I see them. We are a new player in this field, and it is crucial for us to gain trust from our potential investors. This is why we implement a very careful risk assessment methodology and scoring system on our platform. All performed and controlled by qualified and experienced in-house personnel, including risk managers and our AML and compliance officers. They are regularly trained and certified according to Swiss requirements to ensure the highest standards in the industry. We start with borrowing business projects originated from Estonia, our home country, because we can physically assess and monitor them, visit their production facilities, interact with the teams, and permanently control their financial performance. In one word, it is a tailor-made approach to each project that is assessed and listed on our platform, ensuring proper risk management and investment safety. At the same time, maximum transparency and regulatory compliance are ensured by Swiss regulation, well-known for its stability, conservatism, and investor protection measures. We sincerely believe that this makes us different from others. 

In current, quite turbulent times when we are facing unpredictable and unstable financial markets, high inflation rates worldwide, economies seriously influenced by the pandemic period, people want to be sure about their investments that they are well secured and also can bring desired yields. And here I would like to highlight one of our tools planned to be implemented on the platform, the provision fund. It is funded by 2% coming from each project, which is deducted from the platform's commission. The provision fund will provide additional security for our investors in cases when borrowing projects may experience temporary difficulties in repayments according to their schedules. So, our aim is to bring the highest possible yields to our investors, responding to well-identified and manageable risks. As a conclusion, I can say that our internal compliance and risk management procedures are very strong elements, which ensure investors' confidence and should serve as a keystone for our further development. Also, it is important to mention, as our distinguished and competitive advantage, the carefully crafted and implemented functionality of the platform, which gives access to a number of unique features available to all registered users, including investment portfolio management, statistical analysis, security features, and many others. The platform itself is our unique IT product. It is very universal and adaptable. Presently we continue to improve it further, adding functions. It has a very user-friendly and intuitive dashboard adapted for any device. We really hope that our product will receive positive feedback from our users.

Why do you think P2P lending is better or different than more classical ways to invest?

It is almost impossible to assert that P2P lending is better, safer, and more advantageous for investors than other asset classes. It is up to them to decide what expectations they follow and what risks are corresponding to their chosen direction. From my personal opinion, from what I monitor at the moment, the institutional investors just broke into our market segment, and the interest rates are relatively high, and the yields for investors remain attractive. Of course, if yields in the range of 12 to 14% per annum correspond to the proper asset and identified risk assigned to each specific borrower. And of course, if effectively implemented and realized additional measures to guarantee the repayment of the loan, such as collaterals and other securities. From my financial and banking experience, such a setup is viable and can be reasonably balanced. It can deliver to investors the desired result in the yields, and at the same time let them stand on the safe ground and not expose themselves to unpredictable and uncontrollable risks. This is what makes P2P crowd lending attractive for investors from my point of view. 

Let's consider other asset classes. Classical investment in real estate requires heavy financing, and as a negative side, they have very low diversification opportunities. If we are talking about the stock exchange or commodity markets, of course, you can potentially gain some serious profits, speculating and playing short, but it is very risky and time-consuming, and requires a very deep interest for this. Investment portfolios, managed by a third professional party, also might be quite risky compared to the average yield they are capable to propose. We are also facing a serious drop-down and stagnation in the crypto segment, and not talking about even the NFT bubble. Doing absolutely the opposite, we are concentrating on real-sector projects, such as manufacturing and production, services and retail sector, which will always be in demand. I want to draw your attention to the fact that in crowd lending, if you carefully investigate the platform and its team, you are mostly reliant on their expertise and professionalism instead of searching for an occasional chance to choose the right investment opportunity. By using crowd lending instruments, you can invest your funds by small portions at the same time diversifying your portfolio through various crowd lending providers and geography, also through the industries.

What are the plans of Maclear regarding regulation and licensing?

I just want to remind you that we are a Swiss-based company regulated by Swiss financial regulation and Swiss legislation. The essence of the regulatory framework remains the same and very similar to EU normative. As a member of PolyReg, we are regulated and monitored by Swiss financial authorities. And we can act as a financial intermediary of the non-banking sector in and from Switzerland. This practically equals to the European crowdfunding service provider license, but we have some specific limitations imposed by Swiss regulation. These specific limitations are described in our compliance concept and in terms of compliance policy. 

They include a one million threshold and 60 days limitation for the investor fund to be held on Maclear's bank account at any time. Swiss regulation imposes very strict norms on compliance, AML, KYC, GDPR, and other issues to be adhered to. But nevertheless, your question is relevant to our roadmap because we plan during the next year to open a subsidiary company for Maclear to be established in the EU and to be fully qualified for an ECSP license. Of course, we assume that this is going to take some time and effort because at the moment we are fully concentrated on our Swiss company development.

What will happen to the investments if something happens to the platform?

You are absolutely correct, Marco. We are a new company that recently launched our activity and we intend to build trust and confidence for all our counterparties because it is crucial for us. Firstly, according to our contractual framework, we are serving as collateral and collection agent in favor of all our investors beside the role of payment processing. What this means is that we hold in our hands all pledges and guarantees to be provided by the borrowing projects to secure the loans issued to them. Secondly, we very carefully evaluate and assess prospective borrowing projects in terms of their sustainability and proven business performance. I can say that the payback of the loans is guaranteed not only by the collateral but also by careful selection and supervision performed by the platform on each borrowing project. But of course, formally, we have an obligatory disclaimer saying that certain risks exist and we cannot guarantee that the platform will be able to recover 100% to investors in case of borrowing projects failure.

What advantages does being based in Switzerland give Maclear?

I think that all our investors should be very comfortable with Swiss regulation because it ensures proper control and stability. It was not easy to establish the business, consolidate professional people, and convince authorities that we meet the highest standards set by this jurisdiction. The fact that we passed a grand court and audit in May 2023 only certifies that we are on the right track. Let me mention all our key advantages: transparency, conservatism in project selection, adherence to strict regulation ensuring investor protection, strong management team, and a very sophisticated and user-friendly platform. So, I'm very confident that such a setup should attract attention from crowd investors.

Where do you see the field of P2P lending going in the coming years?

I personally think that P2P lending should become a more commonly used financial instrument for small and medium-sized businesses, and also for startups and innovative ideas, currently experiencing a lack of access to traditional banking financing. Strict regulation will increase dramatically the set of requirements and the level of qualification for participating players. But at the same time, it will bring more confidence to the investor community. I assume that investors can hardly expect yield growth because soon this segment will become highly competitive. All well-established institutional investors will try to get their portion of attention. Security measures definitely should be improved among the industry, prioritizing investor protection and their awareness about potential risks. 

But in general, we clearly see the new era of alternative financial opportunities realized through crowd lending tools. I would call these decentralized financing where the role of traditional banking will decrease seriously. The legislation should quickly be adopted for the new realities and new trends. At the same time, it should be reasonably light and not overloaded with bureaucratic complications.

What are the plans for Maclear in the coming years?

Of course, we will try to attract more investors to our platform by providing solid, transparent, and reliable service to our customers. Only by implementing the highest standards set within the industry by our competitors will we be able to attract participants to our platform, both investors and borrowers. And definitely, we want to extend our portfolio of the projects listed for fundraising ensuring the quality and depth of their assessment. As I mentioned before, we plan to follow up every project listed for fundraising and continuously monitor their financial performance very, very closely, and support them with our consultancy and advising. Also, we plan to implement a secondary market option for our investors to provide more flexibility and ensure loans liquidity. As well, we definitely plan to implement an auto-invest function at a later stage. A mobile application is also in our plans. As I mentioned before, our plans also include opening a Maclear subsidiary company in an EU jurisdiction. Regarding Switzerland, our plans are quite ambitious. 

Because we plan to target a Fintech license from the Swiss Financial Markets Supervisory Authority (FINMA). And this would enable us to become a neo-bank and payment service provider. So we will be capable to process clients' funds ourselves, instead of using a third party. We will be able to work as a payment service provider. So we hopefully will be able to cut costs seriously, increase our profits, and also offer better conditions to both our counterparties, investors, and borrowers.

What advice would you give to someone starting in this field of P2P lending as an investor?

My advice is very simple. Before considering investing through some online platform, I would first suggest investigating as closely as possible the chosen platform. Attention should be paid to its regulation and licensing, the owners and the team standing behind it, including their professional background, operational, legal, and contractual base as reflected in model contracts and internal policies. The investors should clearly understand the structure, how the loan is organized, and what role the platform plays, what functions it performs. Also, I would suggest paying precise attention to the risk assessment and mitigation, how this block is realized on a certain platform, how deep and detailed each potential borrowing project is assessed and reviewed.

 We should always keep in mind a very simple rule: to higher yields always correspond higher risks. The task is to find an appropriate balance between them. And of course, another key point is diversification, investing small portions, small amounts, diversifying through various crowd lending providers and geography, also through the industries.

What are the best ways for someone interested to get more information about Maclear and get started with your platform?

For public sources, of course, Switzerland has a very sophisticated information database, credit scoring agencies, open commercial register. You can easily overview all our key team players' profiles through social networking, LinkedIn for example. And for sure, a lot of information you can gather from our website. And then if necessary, verify through other available public sources. We are very transparent and open because initially we were designed and built to be so. We have nothing to hide here.