Are you looking to lend and borrow for better income at better rates? Joe Dobbs speaks to DB resident Mukesh Bubna to find out how.
“Neither a borrower nor a lender be.” Polonius says that in Hamlet to his college-bound son Laertes, and on the surface it’s sound advice. But should we really adopt this as a maxim to live by?
Since Polonius is one of the most consistently misguided characters in all of Shakespeare – he even puts himself in a position where he is killed (by Hamlet) by mistake – the answer is probably not.
For most of us, borrowing and lending money is a fact of life. That there will be times when we decide to borrow money – and lend it – is as true now as it was in Elizabethan times. The question is how are we best advised to go about it.
Let’s say that you have a bit of money – as little as HK$100,000 – that you want to grow. You could put it in a bank but with the interest rate at 0.001% and inflation at 3.5%, you’ll find that after a year, rather than making a profit, your money will in fact be worth less than it is now.
So you might decide to take a risk, and invest in equities or bonds. But the prospect can be daunting due to the volatility of the markets.
Even HSBC stocks, which everybody loves to buy, are currently down 10% year on year. And it’s the same story with bonds, since returns are likely to be as low as inflation.
What would you say then to the prospect of getting a return of up to 15% by lending directly to your peers? Sound interesting? Then check out Monexo Innovations, the online marketplace for peer-to peer lending, set up in July last year by DB resident and former banker Mukesh Bubna.
Monexo helps lenders beat inflation as well as diversify beyond equities and bonds in return for monthly repayments of principal and interest. “You go online and choose who you want to lend to,” Mukesh explains. “You’re diversifying among many borrowers, so risks are lower, added to which Monexo manages the process for you. Online transactions are secured by https technology and a one-time password (OTP) on your mobile phone.”
Sit down with Mukesh in the plaza and you’ll find he’s a very likeable chap, but of course you’ll want to know more before signing over your hard-won savings. Do your due diligence and Monexo’s partners will fill you with confidence. Robertsons Solicitors has drafted all the legal paperwork, Hong Kong Trust Company holds the money not yet lent, and Thomson Reuters’ Accelus software is used to screen everyone involved.
Another obvious plus is that Mukesh worked in Citibank’s Asian division in India, Singapore and Hong Kong since 1994. “Monexo is a new venture but I have the skill set to help people make money,” he says with a smile. “I’m not looking to open a Michelin-star restaurant!”
The big thing here is that Mukesh, who has one son, Kabir, 16, has chosen to leave a relatively cushy, corporate position in the banking world to launch Monexo. Introducing a start-up like this has to be seen as a brave move, particularly in this part of the world where banks control the borrowing/ lending market.
“I’m passionate about coming up with new solutions, and creating a better tomorrow,” Mukesh says. “Everything starts with a dream. As John Lennon so eloquently put it, “A dream you dream alone is only a dream. A dream you dream together is reality.”
Advantages for borrowers
Monexo may be new to Hong Kong but peer-to-peer lending is proven globally. Take Zopa, which has been big in the UK for some 10 years. In 2014 the UK government lent its people GBP100 million through Zopa. Likewise, Lending Club in the US, which formed in 2007, is going strong and now lends US$1 billion plus every quarter.
Mukesh has built Monexo along similar lines, to give those with cash flow (rental income) the opportunity to borrow. “People borrow money because they have a need,” he says. “If you want to break out, for instance start a new business, you have to take on some risk.”
You can borrow up to 48 times your monthly rental income at as little as 7% interest through Monexo, as long as you are a Hong Kong Permanent ID holder.
“This is a cheap and transparent option when you consider that you get 34% interest on a credit card, and 15% to 30% on a second mortgage,” Mukesh says. “Go to a money lender and you’ll be charged no less than 20%.”
As Mukesh explains it, peer-to-peer lending is a truly innovative solution to real-life financial problems. “The wheel of possibility eggs us on to question the status quo and do things differently,” he says. “We are creating a place where we can exceed expectations, and where we don’t just satisfy people, we wow them.”
DB resident Mukesh Bubna is the founder and CEO of Monexo Innovations, the first company in Hong Kong to facilitate direct peer-to-peer lending. You can email him at [email protected], or visit www.monexo.co.