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P2P Invest

How to mitigate risks when investing with Peer-to-Peer financing (P2P) in Malaysia

Have you ever heard of an investment product that provides positive returns without having any risk involved at all? Well, we all know the answer – it’s a big “NO”. Unfortunately, every investment platform and product comes with its own risks, as returns earned are a reward for risk borne. The returns for investment assets such as stocks and equities fluctuate every day, with a mix of good and bad days accumulating to form the returns over time. However, investment products with fixed returns such as fixed deposits, bonds, and Peer-to-Peer financing (P2P) help to mitigate the risk of volatile returns.

Peer-to-peer financing is a type of direct lending to individuals or companies, where a platform acts as an intermediary to facilitate the lending and repayments. P2P financing is usually conducted online via highly specialised platforms. Through digital platforms registered with the Securities Commission Malaysia (SC), P2P financing allows investors to directly lend funds to SMEs and companies, in order to free up cash flow and working capital issues.

Both secured and unsecured loans are usually offered through P2P platforms, with products varying based on the borrowers’ needs. P2P financing platforms may have lower credit thresholds than traditional banks, allowing lenders to obtain financing where they may not have been able to through traditional methods. However, this may also indicate a higher risk, as P2P platforms may be more lenient. Some platforms successfully take this into account by evaluating loan applicants with alternative sources of data that may not be assessed by traditional banks to get an even more accurate gauge of a lender’s repayment ability.

However, despite the risk factors and the relative recency of P2P platforms, the P2P financing industry has demonstrated its resilience and reliability as both an alternative financing and an investing platform.

As of December 2021, approximately RM2.3 billion had been raised through over 30,000 successful campaigns and 4,200 issuers. More than half (54%) of the investors were under the age of 35, with retail investors accounting for 90% of the amount invested. This represented an increase in financing of RM1.14 billion in 2021, which was more than double the amount when compared to the year before. (Capital Markets, 2022)

As P2P financing continues to grow in Malaysia, we have identified the risks and proposed potential solutions in order to assist Malaysians to safely and successfully invest via P2P. Let’s dig deeper and find out how we can overcome the risks and maximise our returns associated with Peer-to-peer financing platforms. 

1. Risk Involved: Losing principal invested

While Peer-to-peer lending platforms generally have fixed returns, there still exists the risk of principal loss via defaults. A default occurs when a borrower is not able to make their repayments on their loans, causing investors to potentially lose a portion of their invested amounts. 

Proposed Mitigation

The solution to this is quite simple – diversified investments. As the adage goes, we should not have all our eggs in one basket. This means that investors should split their funds into different businesses and industries, and in the case of P2P, it’s actually investing into a variety of investment notes. In this scenario, a default will have a lessened impact on an investors total portfolio. CapBay has an Auto Invest function that automatically distributes an investor’s funds into 100+ notes. 

2. Risk Involved: Not achieving the expected returns 

While P2P financing usually provides investors with the potential for higher returns than savings accounts or fixed deposits, there may still be a risk of achieving lower returns than expected.

Proposed Mitigation

To ensure that investors receive their targeted returns, it is advisable to stay invested for longer periods of time, such as 2 -3 years. This allows investors to earn compound interest on their returns, as the profit earned can be reinvested. It may also be helpful to have your investments automatically re-allocated, in order to avoid having unutilised cash. CapBay P2P’s Auto Invest function allows investors to take a passive investing approach as the profits earned are automatically reinvested. We also have shorter investment tenures of between 1 – 6 months, that allows for more compounding interest. 

3. Risk Involved: Credit Risk

P2P financing carries credit risk, as the risks borne by investors are tied to the repayment ability of the borrowers. This credit risk may be heightened as applicants for P2P loans may have poorer credit histories that hinders their ability to obtain traditional loans from banks. 

Proposed Mitigation

To avoid this, investors should conduct their own research on the borrower’s profile properly before making an investment. Some platforms will require and conduct strict background checks on their borrowers before providing them with financing. This information will then be made available to investors to aid in the decision making process. CapBay takes pride and put in a lot of effort to ensure a low default rate where it’s currently at less than 0.1% since 2016 inception, reflecting our adherence to our strict credit controls. 


Until recently, the only real option for obtaining a loan was to approach a bank or similar financial institution. Peer-to-Peer financing has made the borrowing process easier for SMEs and other businesses in order to assist with their growth. Similarly, investors can now invest and earn higher returns compared to other types of investments, while controlling the level of risk based on their investment appetite.
Thus, by helping to shed some light on both the risks involved and the solutions to overcome them, we hope that more investors will be well-equipped to maximise their returns with Peer-to-peer financing in Malaysia. CapBay ensures that SMEs and businesses have safe and secure access to financing, while also providing the opportunity for investors to earn reliable and consistent returns.

Begin your investing journey with CapBay today!

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*This article is not meant to recommend CapBay P2P products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

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P2P Invest

Top 5 reasons why you should diversify your investments with CapBay P2P

Since the outbreak of the COVID-19 pandemic, we’ve observed high market volatility due to the uncertainties surrounding economic restrictions in Malaysia. We know investors are actively searching for alternative investments to earn steady returns on their investments. Today, we’ll be talking about how you can consider investing with CapBay Peer-to-Peer (P2P) as a way to diversify your investment portfolio while earning attractive returns.

In short, P2P Financing platforms match businesses directly to investors to obtain financing. You don’t need a middleman like a financial institution to work as an intermediary. It’s a two-way street. Businesses have the opportunity to raise funds for their company and you, as an investor, get to see what you are investing and how much you will get in return.

While a lot of articles talk about the benefits of P2P financing for SMEs, there are also many advantages of being an investor. Read on to find out more:

1. Earn steady and reliable net returns

By investing with CapBay P2P, you can unlock net returns of up to 10% p.a. Of course, like any investment, these returns come at a risk. Remember that when investing on P2P platforms, risk-returns are dependent on the credibility of the Issuers on the platform. This differs from other market-linked investments such as mutual funds and equities where the returns fluctuate according to the performance of the stock market.

2. Robust risk management

Leveraging data and automation, CapBay is able to curate high quality and safer financing notes for investors. Recognising the risks involved, CapBay specializes in providing financing to SMEs backed by blue-chip companies and Government-Linked Companies (GLCs). This allows our investors to invest in much safer SMEs.

3. Passive Investing

In CapBay, we aim to provide a seamless investment experience from account opening till the end. With our Auto Invest feature, you can easily automate your investment across various notes on our platform. All you have to do is select an Auto Invest profile according to your risk appetite and CapBay will take care of the rest. Alternatively, you can also manually invest more in notes that you are confident in. However, it should be highlighted here that diversification does not eliminate or remove all risk in respect of investment.

4. Generate returns on undeployed cash

Another great feature when investing on the CapBay P2P platform is that we ensure your money will truly work for you. CapBay Plus ensures that you continue to generate returns, giving you FD equivalent returns on undeployed cash as long as your Auto Invest profile is enabled.

5. Contribute to the growth of Malaysian SMEs

As you know, P2P is a form of crowdfunding that enables Malaysian SMEs to obtain financing directly from investors. This simplifies the financing process for SMEs while providing alternative investment opportunities with attractive returns for investors. And most Issuers on the platform are made up of (SMEs) which are heavily impacted by the pandemic. By investing in P2P, you can support Malaysian SMEs and improve the economy too! As any Malaysian will say, Malaysia Boleh!

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*This article is not meant to recommend CapBay P2P products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

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Finance GuidesP2P Invest

CapBay P2P Financing: The New Low Risk Investment in Town

CapBay P2P Financing: Who are we?

CapBay P2P Financing is the new low risk investment platform in town. Today, we will be talking about how our platform not only offers investment with attractive returns but also how we endeavour to mitigate the risk of our investors.

 

We value your contribution and do everything in our capacity to make your investment secure and rewarding. We ensure that all our investment notes are credible to offer you a diversified portfolio of investments. Let’s check out the 9 innovative features of our CapBay P2P financing platform.

 

 

1. Invoice notes only from credible buyers

Currently, CapBay offers invoice financing investment notes from credible buyers only. We fund the Issuers (SME sellers/businesses) in our P2P financing platform via invoice financing.

 

In short, when an Issuer (business) sells their services or products to a buyer on credit, they often have to wait up to 120 days to get their payment. This stretches their payment term and often creates a shortage of cash flow. To reduce this long term payment, the Issuers come to our platform for funding on the basis of their invoice.

 

We provide them upfront payment on their invoices, which are basically funded by you, as an investor. Within 120 days, the buyer would then pay the amount due on their invoice to us. This is when your investment matures and your funding is repaid with additional interest as a return.

 

To know more about Invoice Financing, read Invoice Factoring: What is it &  How it works?

 

We secure your investment in our P2P financing platform by dealing with credible Issuers that sell products or services to reputable buyers. This includes Government-Linked Companies (GLCs), Public Limited Companies (PLCs), and Multinational Companies (MNCs). This helps reduces the chances of financing loss in our platform. Besides, we use our financial supply chain management methodologies to reduce any additional risks.

 

 

2. Managing risk is our top priority

Our supply chain management expertise makes us better in managing risks in our P2P financing platform. We methodically check on our Issuers and their buyers before we let them access our P2P financing platform, as we will explain in the following points. In the event of non-payment, we also have a recourse to the Issuers in the form of a personal guarantee to protect your investment.

 

 

3. Robust tech team

We have a unique advantage over other P2P financing platforms due to our robust tech team. Our tech experts use machine learning and algorithms which allows us to emphasize more attention to details to effectively screen the Issuers who apply for funding in our P2P financing platform. This reduces the risk of human errors when we vet our Issuers and their buyers, making it safer for you to invest in them.

 

 

4. Stringent credit checking process

Our credit experts work hand in hand with our tech team to fast track our credit checking process. They adhere to both conventional and unconventional methods to check the background history and relationship between the Issuers and buyers and ensure whether the buyers have the financial strength to repay your funding on time.

 

Our credit team checks on traditional metrics such as financial reports and the Issuer’s and buyer’s financial performance. They also tread to an unconventional way of vetting the Issuers and buyers by creating an iterative predictive statistical model that utilizes artificial intelligence to scrutinize over 2000 trade data points for each and every transaction.

 

This in-house technique is developed in collaboration with our tech team so that the credit experts can quickly check the counterparty risks, relationship stability, concentration risks, and business trends for each and every Issuer and their buyer before they are allowed to access in our platform. We do not skip any step to ensure that your investment is secured and the risk level is well-managed to its minimum.

 

 

5. Measures to maintain our track record of 0% financing loss during Pandemic 

We understand that the current Pandemic and the Movement Control Order (MCO) makes you anxious as an investor. To ensure your security, we are constantly in touch with our Issuers to make sure that they will repay the funding on time.

 

Our Funding Specialists follow up diligently with our Issuers to ensure their business wellbeing and keep tabs on their business performance. We explicitly follow up on the Issuers over calls to ensure that they can make the repayments on time. So, you can trust CapBay P2P financing platform in this time of crisis that we will deliver as per your expectation, minimizing the chances of financing loss to the best of our ability.

 

 

6. First in market, Auto-investment Programmes

New to investment? Not to worry. You don’t have to be the expert on all things investment. Our innovative Auto-investment Programmes helps you to invest easily from the comfort of your laptop or mobile, even if it is your first time investing. We can walk you through the whole process and automate your investment so that you don’t have to take the hassle on the technical details of your investment.

 

Currently, we have 2 Auto-investment Programmes to help manage your risk appetite for your investment:

 

  • CapBay Diversified – A full range of notes at moderate risk and high returns.
  • CapBay Select – A curated set of notes with low risk and moderate returns.

 

You can simply deposit your money in our platform, choose one of our Auto-investment programmes and set your target limit. We will allocate your funds accordingly, obliging certain parameters such as risk grading and maximum exposure while you can relax and wait for your investment to mature and yield attractive returns.

 

We have started registration in our platform and have also opened up our Early Access Programme where you can start investing with a minimum deposit of RM 10,000 only. This offer is only for a limited time only, so don’t miss out.

 

 

7. Upcoming Programmes for the Risk Averse: Introducing CapBay Assure

If you are truly risk-averse at heart, then our upcoming CapBay Assure programme will be ideal for you. Investors that are looking for the lowest risk possible, can opt for this programme. You can access a full range of investment notes under CapBay Assure but as extra security, both your principal and returns will be guaranteed by our sister company, CB Capital Sdn Bhd. The guaranteed returns on these notes will be fixed at benchmark Overnight Policy Rate (OPR) plus 2.5% to 4% p.a.

 

 

8. Short term investment

If you are hesitant to invest your money for the long term in this time of uncertainty, you are in luck. CapBay P2P financing platform offers short term investment notes with 1-6 months’ tenure. So, your money will be tied up for only a short period of time while you will get to earn up to 10% return by utilizing your money in a reliable P2P financing platform like us. This reduces your risk of long term investment where you have to wait for at least a year to get substantial returns on your investment.

 

 

9. Transparency

We walk you through our entire P2P financing process without any concealment so that you get to know us before you decide to invest in our platform. Our Relationship Managers provide you with a high touch experience so that you fully understand how we work, how we can meet your expectations and that you have our constant support throughout your investment journey.

 

 

To Summarize

We aim to create a P2P financing platform that is low in risk with attractive returns. With the above 9 features, you can be assured that the 9 above features will assist to reduce your investment risk, that seeks to manage risks to its absolute minimum with every step of the way.

 

With the Pandemic uprising taking over the world’s economy, you need a solid plan to reproduce your money. Investing with us will give you the assurance and passive income that you seek in an investment. Your money will be tied up only for a short period of time and generate returns up to 10% p.a. without any hassle.

 

 

 

Register your interest in CapBay’s P2P Financing Platform and our Relationship Manager will be in touch soon.

To go directly to our P2P platform, click the button below.

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If you are away from your laptop, you can simply access our CapBay P2P financing platform via mobile through our android and iOS apps. Get started today!

 

 

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Finance GuidesP2P Invest

Top 3 Myths Busted on the Risk of Investing in P2P Platform

Peer-to-Peer (P2P) financing is a method of alternative financing that matches investors with businesses looking for financing. In doing so, investors such as yourself are able to invest in businesses that they deem trustworthy. Thus, one of the potential challenges an investor might face is finding a suitable business to finance that is both able to repay your funds on time while also providing attractive returns.

P2P financing platforms can address this problem by creating a bridge between you and the business, allowing for the direct transfer of information. In doing so, you would be able to access the platform to better understand the businesses that require funding and make informed decisions in financing the business most suitable to your risk appetite. This allows you the opportunity to understand who you are providing financing to, the returns you can expect as your investment matures, and when you can expect your returns –  all within the shelter of a credible P2P financing platform.

In spite of this, many people still regard P2P platforms as a high-risk investment as they are perceived to have returns that are not guaranteed. This however, may not necessarily be true. In fact, in this article, we will be busting 3 prevalent myths surrounding P2P financing.

 

 

3 Myths Busted on Why P2P Financing Platforms are NOT High-Risk Investment after all!

 

1. Only businesses with bad credit scores seek financing from P2P platforms as a last resort

Many people think that businesses seek funding on P2P platforms as a last resort when they are rejected by banks or have a poor credit score. In reality however, a business with a good credit score may also struggle to get bank approval for financing.

This may happen for a number of reasons. For example, a business may not have enough collateral to meet the bank’s stringent criteria, or may be a new company that may not have any historical credit scores that can be crucial in acquiring financing from a bank.

 

A key reason businesses may choose to obtain financing through P2P platforms is the speedy application process. Whereas banks may take months to vet and approve applications, P2P financing platforms can conduct the necessary due diligence procedures in only 2 to 3 weeks. The ability to obtain financing in a timely manner is crucial for businesses for cash flow purposes. P2P financing also represents a much more convenient source of financing for those who prefer flexibility in timeliness and costing, with less surprises along the way when compared to banks.

 

2. P2P financing platforms are not regulated… Oh my!

Many people have the misconception that P2P financing platforms are not regulated and therefore are not credible enough to invest in. On the contrary, P2P financing platforms are strictly regulated by the Malaysian Government. The Government actively supports platforms such as P2P platforms that provide innovative digital solutions that benefit both businesses and investors simultaneously. 

In fact, the Securities Commission Malaysia (SC) has recognised 11 P2P financing platforms, one of which being CapBay, under the name of Bay Smart Capital Ventures Sdn Bhd. On 17th May 2019, the SC approved us as a Registered Market Operators (RMO). Our platform actively operates in line with SC’s rules and regulations.

 

3. P2P financing platforms are only for investors with a high-risk appetite

This is the most common misconception against P2P. While it is true that P2P financing carries a certain degree of risk, this is no different than any other form of investments. While potential default risks may be frightening to some, a well-diversified P2P portfolio allows you to mitigate such risks by limiting your financial exposure to only a small portion of invested funds. Thus, choosing a P2P financing platform that offers well-diversified investment notes and robust risk management allows you to earn greater returns with relatively lower risk. However, it should be highlighted here that diversification does not eliminate or remove all risk in respect of investment.

Get to know the new low risk investment in town, CapBay P2P Invest. Our platform prides itself on providing great returns, offering only the highest quality investments notes in order to minimise risk while maximising returns for our investors.

 

 

Check it out!

 

CapBay P2P Invest: The New Low Risk Investment in Town

 

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P2P Invest

CapBay P2P Invest – A Step by Step Guide to Invest in our Platform

Peer-to-Peer (P2P) investing is a method of alternative financing that matches businesses directly to investors to obtain finance. P2P investing does not require a middleman such as a financial institution to work as an intermediary. It’s a two-way street where the businesses have the opportunity to raise funds for their company and you, as an investor, get to provide financing to local businesses while gaining attractive returns. 

The CapBay P2P financing platform adopts a transparent policy, boasting attractive net returns from a pool of available investment notes at your disposal. We have made the process of P2P financing easier with customer-friendly approaches, and a seamless approach to investing. Now, you can invest your savings in a trusted platform to earn attractive returns.

Before we tell you more about our P2P platform, let’s learn about how it works.

How Does our P2P Platform Work?

CapBay P2P works great for businesses that need funding and for individuals who are looking for creditworthy alternative investments for their savings. We match both of their needs, turning separate challenges into a win-win opportunity. 

For instance, if an SME requires more capital to run its operation, it can request for financing from the CapBay P2P financing platform. We will then undertake a rigorous assessment to ensure that the SME Issuer (applicant) has a sound financial capacity to repay the financing in due time, assigning them a risk grading in the process. 

Once the SME Issuer’s application is approved, the required financing is crowdfunded from the investors via the CapBay P2P financing platform. We will facilitate the whole crowdfunding process, ensuring that the entire process is seamless. The savings you invest in the platform will be kept in a trust account, to which we won’t have any access to. We will then collect all the invested funds from the crowdfunding exercise and disburse the aggregated amount to the SME Issuer once the target has been met.

Once your investment matures, your principal and returns will be credited back into your CapBay P2P account. The end result is, the business will have its required financing in its time of need, while you earn an attractive return on a short tenure investment in a simple and effective way.

In P2P financing, it is advisable to split your investment into a variety of notes to invest into different businesses. Diversifying your investment across multiple businesses will reduce the impact of defaults on your portfolio.

CapBay P2P will guide you through your entire investment journey and notify you on every investment note so that you can track the progress of your investment at any given time. Whenever a new note is issued, an email will be sent to you to ensure that you are up to date on all the investment offers available.

We aim to make a difference by creating a platform that encourages transparency. Investing with peace of mind and clarity is what we offer to our investors.

So, how do you invest in CapBay P2P Financing platform?

Just follow these 7 simple steps to be a part of the P2P Investing journey.

 7 Easy Steps to Invest in our P2P Platform

1. Get your documents ready before you sign up
  • Scanned copy of your Identification Card (IC) (front and back) 
  • Mobile number for One-time PIN (OTP) verification
  • Details of your bank account
  • Bank statement copy
2. Register on the CapBay P2P Financing Platform
  • Download the CapBay P2P Invest app on the App Store or Google Play Store or go to http://invest.capbay.com/
  • Complete your basic details to create your account
    • Full Name (as per Identification Card / Passport)
    • Email and Mobile verification
    • Password details
    • Banking information
    • Wealth declaration
3. Make an Initial Deposit of at least RM 10,000

You can get started by investing with a minimum portfolio of at least RM 10,000. However, we suggest that you build up your investments to RM 50,000 in order to ensure that you are sufficiently well diversified, allowing us to allocate your funds into a diverse range of investment notes.

To make a deposit, transfer the money from your bank account to our P2P account via bank transfer, internet banking or cheque. As of this time, we do not allow any cash deposits into our platform.

Next, submit a deposit request through the CapBay P2P platform, including the payment receipt as proof of your payment. Once you make the submission, we will approve your deposit within 3 working days.

4. Set up your Auto-Invest Target function

We are the first in the market to introduce Auto Invest functionality to simplify your investment journey. Our Auto Invest function will automatically diversify your investment across various notes within our investment platform.

In the Auto Invest page, you will be able to select your Auto Invest profile that will allocate your portfolio into our programmes. These profiles have allocation – that correspond directly to your risk preferences, allowing you to tailor your investment according to your personal needs. 

Once selected, the  Auto Invest function will allocate your funds with varying limits between our programmes, such as:

  • CapBay Select – A carefully curated set of low-risk investment notes with moderate net returns of up to 8% p.a.
  • CapBay Diversified – Full range of investment notes with moderate risks and higher net returns of up to 10% p.a.
  • CapBay Assure – Our safest notes, delivering net returns of up to 6% p.a. with principal and interest guaranteed via a reserve fund
5. Start Investing

Once you have made your initial deposit and selected an Auto Invest profile, every time a new note is launched, an email notification will be sent to you. You can view the note on the platform by navigating to the New Opportunities page under the Invest Now tab.

  • Find out more information about the note by downloading the investment memo 
  • Choose to opt-in or opt-out of a note before it launches
  • After the investment note launches, your funds will automatically be invested in it, based on our allocation policies
  • You can also manually top up your investment on a note up to its funding limit after the Auto Invest allocations for the note has been performed
6. Earn Your Return Once the Investment Matures
  • Once the note reaches its maturity, you will earn attractive net returns of up to 10% p.a. (depending on the programme and investment note you choose) on top of your principal. This amount will be credited back to your CapBay P2P account.
  • If you wish to withdraw your returns, turn off your Auto Invest by unselecting the profiles once your investment matures. This will ensure that your funds will not be automatically reinvested, and are ready for withdrawal.
  • If you do not cash out your investment after it matures, it will automatically be reinvested to provide compounding interest on your investments.
7. Monitor Your Portfolio

Now that you know how to invest, get familiar with the following tabs to keep track of your investment:

  • Invest Now Tab – Overview of your cash balance, annual return and loss rate
  • Performance Tab – Provides details on how your returns have been calculated
  • Portfolio Tab – Gives an overview of the status of your notes

What are the Benefits of Investing with the CapBay P2P?

  • Accessible by web platform and mobile app from anywhere, at any time
  • Short investment tenure of 1 to 6 months
  • Safer alternative investment platform with a 0% default rate 
  • Personalised service with Relationship Managers providing investor support
  • One of the Firsts-in-market Auto Invest programmes 
  • Transparent returns with detailed breakdowns of net returns provided upfront to ensure that there are no hidden fees

Conclusion

The CapBay P2P financing platform takes away the complexity of investing. You can invest via your mobile device or browser from the comfort of your home, based on your preference, with customer-centric features that ensure ease of use. Reach out to us if you have any queries. In the meantime, we will continue to post more about our platform on our blogs and social network, so keep connected to learn more exciting stuff about our P2P platform.

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