Smartphones have turned our lives upside down. Personally, I was a late iPhone adopter still clinking to my Nokia and later a Blackberry until the early 2010s. Despite my lack of foresight, smartphones have had a phenomenal adoption rate of 24.3% per year since 2009. I bet you would not guess what has been the second most adopted innovation - Exchange Traded Funds (ETFs) with an 18% yearly growth for the same period. ETFs have been introduced in 1993 but it was not until 2010 when they entered adulthood with $1T of Asset under Management (AuM).
The technology adoption rates in the past 10 years
Since then the smartphone has struck back through WeathTech, Robo Advisors, and Zero Fees Brokers putting powerful trading and wealth management tools into customers' pockets. This incredible innovation happened on the distribution or in other words, the demand side of the capital markets. Nevertheless, ETFs were the last game-changing innovation on the manufacturing (supply) side of the capital markets and it happened already 28 years ago.
So what innovations are coming up on the supply side now? Tokenisation and fractional ownership of assets are breaking the minimum investment barrier opening number of investments to individual investors. These concepts are behind Robin Hood’s and Revolut’s “Invest from $1” slogans. Another much less visible, less sexy but equally important trend is in discovering new assets that are brought to markets thanks to the ability to process large amounts of data and make sense of it. This is the topic I would like to discuss deeper.
What needs to happen for a new asset to be brought to market
Why have been new investment assets like invoice financing or investing in small business loans made available to investors only recently? It is because there were three issues that needed to be resolved first.
Visibility - assets are locked on private firms’ balance sheets
Trust - lack of belief by investors in the mere existence of these assets
Valuation - the owner of the asset has a better idea about the asset value than an investor
Technology that brings new asset classes to the market
Fortunately, there are three technological innovations that are helping to overcome the issues and unlock the hidden value of these assets.
Access to data - data feeds from proprietary systems (APIs), real-time data on events like weather with IoT devices, blockchain Oracles bringing the data to blockchains, and others
Trustless systems - the irreversible records of unique events written on a shared ledger (Blockchain)
Machine learning - using big data processing and machine learning for asset valuation
At Kilde, private investment platform for alternatives, we make the best use of these three innovations. We build an investment platform for alternative assets that make new assets available through data-driven insights. One of the assets is debt capital for digital lending firms to reach underbanked customers in South East Asia. Unlocking consumer loans as an investable asset takes four steps.
Image: Kilde investment process, 2021
Kilde investment process
Discover - provide a window to consumer lending loans with big data processing and machine learning
Produce - Manufacture investable consumer lending assets (tokenisation)
Fortunately, this method can be deployed to other “data-intensive” assets like revenue financing, SME lending, lending for rent deposits, and many others. We will keep seeing new assets manufactured, tokenised, and distributed through the smartphone in your pocket.
Kilde is a regulated investment platform for alternatives. We operate as a two-sided platform connecting institutions / HNWI with securitised private investments. Our main alternative asset classes are private debt, venture debt, and recurring revenue financing. Kilde has partnered with leading non-banking consumer & SME lending firms to give investors safe and controlled access to consumer lending assets. Our unfair advantage is vast accumulated data on consumer & SME assets performance as well as scalable investment and securitisation tech platform. Thanks to Kilde’s license for dealing in securities, we securitize alternative investments into digital securities.
Private debt, as an asset class, is growing rapidly.Volumes of private debt have increased significantly over the last 12 months and are poised to continue growing strongly in the coming years. Increasing cash flow needs resulting from the COVID-19 pandemic, accommodative monetary policies, and low-interest rates are the main contributors to the expected increase in...
KILDE is focusing on a specific asset class within private debt - consumer lending assets. We have analysed more than 30 consumer finance lending firms in the past 6 months in Europe, Central Asia, and South-East Asia. We have seen the impact of the COVID crisis on their loan books and we have also seen that the consumer lending assets have shown...
Disclaimer: KILDE PTE LTD is incorporated in Singapore under the registration no. 201929587K and holds a Capital Markets Services licence (CMS101016) issued by the Monetary Authority of Singapore to deal in capital markets products under the Securities and Futures Act (Cap. 289). The information on this website is intended for “institutional investors” and “accredited investors”, in accordance with the Securities and Futures Act (Cap. 289) of Singapore. Information provided on this website does not constitute an offer, invitation to invest, solicitation or advice on buying or selling financial instruments and other capital market products.