Marketplace for NPLs: “The potential in Europe is enormous.”
Debitos CEO Timur Peters has talked to the Deutsche Börse Venture Capital about the business model of his online marketplace and the financial centre Frankfurt. The network regularly introduces start-ups in its “Future Friday” series who want to change the future with their ideas.
In a nutshell: what does Debitos do?
Think of Debitos as Ebay for banks and companies. On our online marketplace, you can bid for receivables and loans. More than 500 investors from 14 countries are now registered. Since 2013, receivables with a nominal value of €4.5 billion have been sold. We offer the platform in Germany and other European countries.
What about Debitos is forward-looking?
Properly serviced and non-performing loans are primarily traded in bilateral business relationships. Usually, this market is only accessible to banks and companies above a certain trading size. We have created the first marketplace for these assets in Europe. They can be traded digitally and transparently for as little as €500,000. The potential in Europe is enormous: In the euro zone, loans worth around €1 trillion have currently defaulted, which are of interest for the secondary endowment policy market.
How exactly does it work?
In the first step, the receivable is assigned to a trading class and the individualised data room is prepared. An algorithm helps us to select suitable investors to participate in the auction from the registered profiles. The seller loads all credit information into the data room so that the investors can inform themselves. Then the auction can begin.
The structure of the bidding process with auction, minimum price etc. creates a lot of tension, which often leads to a higher market price in the end. Only a few weeks pass from preparation to the final sale. On the “classic” way it takes months or even years. In addition, the gap between buyer and seller is reduced and a higher number of transactions is possible.
Debitos is a Frankfurt based company – what do you particularly appreciate at this location?
The financial centre Frankfurt is absolutely ideal for a fintech like us. Especially at the beginning, when you want to gain a foothold in the banking world and with industry representatives. All relevant players – i.e. banks, management consultancies – are present here. The ecosystem for fintechs has improved considerably in recent years. TechQuartier and its follow-up initiatives have set the ball rolling, especially for start-ups. It is now easier for many interested parties to set up their own business in the fintech area.
How do you think the Frankfurt Rhine-Main start-up region needs to change in order to attract even more start-ups and investors?
The attention of banks, the press and politicians has increased massively compared to 2011 or 2012. This is positive, of course, but it has to go further if you want to get closer to cities like Berlin, Hamburg or Munich in the medium term. Frankfurt has extremely great potential, especially in the financial sector that is clear. However, the fintechs lack capital – there are almost no venture capital companies here. Other cities are much better positioned in this respect. The local banks are slowly but surely opening up to the subject of fintech, but are still cautious when it comes to investments or cooperations.
How do you plan to attract talent to Debitos in the future and bring it to Frankfurt?
We go different ways: job advertisements, headhunters, but meanwhile a lot is done through the network, which we developed in the past years in the fintech and banking industry. Actually, there is also some movement on the market here. It was not long ago that we were only able to attract most specialists away from the banks with high salaries or investments. But for two years bank employees have had a great interest in working in the fintech environment.
The interview was first published in Deutsche Börse Venture Network.