– The impossibility of competition – E24

Andreas Talseth, Kredd’s CEO, justifies the shutdown by saying it would be unfavorable to continue operations when the company is not covered by new rules.

As mentioned by E24, new rules for loan-based public financing are in the works. Last week, a government-appointed committee put forward proposals for how a new EU regulation for the industry could become part of Norwegian law.

The Commission dealt only with public financing of corporate loans. Kredd is one of the few Norwegian companies that focus, on the other hand, on public financing of loans to consumers.

The commission’s deferment of evaluating this means we have to compete on different terms against both banks and other platforms, Talseth tells E24.

7 percent interest

Kredd’s principal states that they currently have about 174 borrowers and 452 lenders.

The average interest rate for lenders since its inception has reached 7 percent, while borrowers have paid an average interest rate of 7.55 percent. According to the debt registry, the average nominal interest rate for consumer loans is 14.27 percent.

Talseth says that all existing borrowers will have the opportunity to transfer the loan to Ikano Bank on equal terms as today.

If the borrower does not have the payment notes, the payment will continue as usual.

If the borrower bears a notice of payment after the loan is withdrawn, the loan will be purchased by a third party. Talseth says this is regulated by the loan agreement.

The impossibility of competition

It hasn’t fully taken off for Kredd after going live in 2018.

Last year, they finished the year with a turnover of just under 500,000 crowns. The annual result came to minus 3.8 million.

Andreas Talseth explains that they have worked to expand operations, but were entirely dependent on being able to implement many of the actions in EU regulations.

These include “automatic investing”, that is, the opportunity for a consumer to invest in a loan portfolio.

It is especially important when it comes to microcredit, such as the Kredd platform. If the one-million limit had also been removed, institutional capital could have been obtained, which we see common abroad, says Talseth.

As an investor, you can currently invest a total of 1 million kroner in publicly funded loans over the course of a year. For corporate loans, the limit will disappear when the EU regulation is implemented. For consumer loans, they will remain there until further notice.

– We should continue with manual investments from private investors who have to transfer for each individual loan from the bank online. Then it would be impossible to compete for ease of use with platforms targeting businesses, says Talseth.

Write off the debt register

This isn’t the first time Kredd’s boss has faced regulatory hurdles.

– First we were kicked out of the debt registry, then the SBL, says Talseth.

SBL, or Approval Based Loan Application, is what enables digital collection of tax returns and unemployment benefits.

– That gave us a huge disadvantage to other banks that can retrieve this information digitally. We hoped to be regulated on an equal footing with other consumer loan banks, and at the same time have the same access so that we can provide good credit ratings and competitive customer services.

Smart loan application

Going forward, Kredd will continue to focus on providing technology to banks.

The company now has an agreement with Ikano Bank, where they have made what they describe themselves as “the smartest loan application in Norway”.

This is the technology that collects all financial information about the borrower.

By connecting several data sources, we can find up-to-date information about mortgages and auto loans, which are not currently in the debt registry, Talseth explains.