Aventus Group: risk management is a key for sustainable business

At a time
when international markets are facing the challenges of the COVID-19 and the
resulting economic consequences, we receive questions from our investors about
how our partners will manage risk issuing loans in the near future and how the
protection of their investments will be ensured.

We have
asked Aventus group, PeerBerry’s largest business partner, to provide detailed
answers to our investors’ questions. Today in our Blog we speak with Gennady
Machulin, Chief Risk Officer at Aventus Group.

  • What steps and measures does Aventus Group take to ensure the safety of
    investors’ money?

The question of wise and secure investment possibility is the key in the
context of global prolonged crisis. Investing in P2P is most preferable, as
other assets begin to lose in price and their demand falls. When international markets
are exposed to various fluctuations, profits from investing in P2P loans remain very stable in
comparison with other investment means like stocks, bonds etc.

The main purpose of receiving loans is
the purchase of essential products, and the demand for these products will
remain constant even under strict quarantine. Thus, the investment in basic
needs will remain a very good tool to save investors’ money.

All the loans, issued by Aventus Group companies and listed on PeerBerry for investors choice to invest are fully secured with buyback guarantee. In addition, the management of Aventus Group (together with another PeerBerry business partner Gofingo Group) have made very responsible decision to apply an additional Group Guarantee to ensure maximum protection for all investments. Additional Group guarantee will ensure additional protection for investors’ money, in case some loan originator will face financial troubles and will not be able to implement buyback guarantee. This means that in case of insolvency of some company, other Aventus Group and Gofingo Group companies will cover all the liabilities of this company on purpose to protect investors investments, maintain transparency and good reputation of all the Group.

  • The whole world is currently facing the threat of coronavirus that poses
    major challenges for the global economy. Will Aventus Group change its risk
    management strategy? If so, what exactly will be changed?

We have already “hedged” our risks in some countries by tightening
credit policy and changing the product parameters. Countries, where Aventus
Group companies issue loans are less affected by a pandemic virus. In addition,
our loans are issued online, which also helps to keep our business quite
efficient during quarantine. Our portfolio is highly diversified and it allows
us to direct efforts and increase volumes of loan issuance in more stable
markets. In most countries, where Aventus Group operates, the crisis is not
that obvious like in continental Europe. Lending in many markets is closely
related to the public sector and the refusal to supplement the budget with
loans is the last thing the governments would do.

  • According to your forecast, how many customers who are granted with
    loans issued by Aventus Group companies will face solvency problems? What is
    the percentage of increased number of overdue loans?

As regards the risk growth levels, it directly depends on a number of
factors, for instance, some customers from banking retail area who were
accustomed to go to bank branches before quarantine will move to the online
microfinance organizations segment, like Aventus Group companies.

Personally, I do not expect that the risks will increase by more than 4-5%.
It is not much different from a seasonal surge of risks on New Year and

  • Will you tighten the risk assessment of customers who apply for the

According to our risk management procedure, the default rate is
manageable by 95%. In each market, we use about 15-20 sources for obtaining
information about borrowers, starting with classic demographic parameters and a
credit bureau history, and ending with an assessment of customer behaviour when
completing the questionnaire (for instance, how many times did he/she move the
cursor when choosing the loan amount or how often did he/she press hot keys). All
this data set is processed in a single decision-making centre and managed
on-line depending on changes in risk parameters in a particular market.

  • What are the key factors that are currently considered when assessing a
    person’s access to credit? Is the customer’s risk verified in official

The data structure and significant factors vary greatly from country to
country. It is important how many loans the client had previously had in the
history credit bureau; meanwhile in Vietnam, the client’s medical insurance is crucial.

During the customer risk assessment, we use 300 to 500 parameters and
collect all legally available information in the market, including public
services, as access to them is often free of charge.

  • What in your opinion will increase the need to borrow at a time of
    economic crisis? What could be the reasons for the increased need for lending?

Demand for micro-loans usually tends to increase in times of economic
downturn. This is quite a good time for this business and many players in the
online microfinance organizations segment if they remain in the market and gain
access to a significantly large segment of, for instance, banking clients. The
online segment is currently growing quite rapidly. It applies not only to
borrowers, but also to entertainment portals and home theatres.

  • Is there any assessment as to which loans – short-term or long-term –
    are more risky?

The short-term loans segment is liquid and the risks are immediately visible in many cases. Moreover, there are opportunities to extend the loan in many countries and it allows replacing a short-term loan to long-term loan at higher lending rates. Currently the short-term loans are the main product in portfolio of our company. The total Aventus Group loan portfolio is diversified between short-term, long-term and leasing loans, which are secured with collateral.

Gennady Machulin

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