Here is how Robocash compares with other European platforms I have invested in:
|Platform||Link||Target Rate (%)||My XIRR (%)||Status||Live Rating|
|Review||Variable||11.47%||CLOSED (to UK)||4/5|
Robocash was launched in 2017 as a division of the Robocash group. The intention was always for a hands-off product, as their tagline ‘Investment Robot’ implies that it does all the work for you. The site offers the chance for investors to fund personal loans through its subsidiary companies. Much like the type of loan we have seen on other platforms, these are short-term and generally low value loans. Robocash providers lend in Spain, Kazahkstan, Singapore and Vietnam so offers something different.
Unlike Mintos and Twino, everything is taken care of here. There is no vetting or loans to be done, neither is their any need to change currencies. Loans in this sector are characterised by extremely high rates of interest, which are commensurate with extremely high default rates. This makes it a tricky part of the market to profit, and generally why many struggled on Bondora. Robocash seeks to take away this risk. It offers a greatly reduced rate of interest (which has recently declined to 12%), but for this reduction offers a Buyback guarantee. This means that you are compensated for loans that do go bad.
So far, this model has worked extremely smoothly. While feedback from investors is thin on the ground, the group claims it has 10,000,000 customers so far.
Here is a list of Robocash features:
|Advertised Returns||Up to 12%|
|Minimum Investment||1 EUR|
|Provision Fund?||Buyback guarantee|
|Available in ISA?||No|
|Active on forum?||No|
Is Robocash profitable?
The website makes some bold claims. 2019 saw over 3m loans listed, and net profits of 14M euros. This is corroborated by looking at the financial statements of Robocash Group. The accounts seem impressive on first glance. Profits have grown rapidly from $5.8m to $15.8m in the period between 2017-2019.
As we have seen in the low-cost loan sector, profit is separate to cash. So whilst the revenue from a loan can be booked straightaway, some provisions need to be made for the fact that loans go bad. In Robocash’s case, this provision is large. The credit loss allowance was $83m from the $131m in interest income.
On the balance sheet, the company carries $8m in cash, although most of this is possibly customer deposits, as loans and borrowings arround for $7.759m. Net equity position is $37.8m; that is, the assets outweigh the liabilities by this much.
Only $44m of money was loaned out at the end of the period. We can surmise from this that the interest rates are extremely high and the average loan period is very short.
On the face of it, these results almost seem too good to be true. But maybe I am wrong, the group plans a stock market offering later this year. This would greatly improve the reliability of the accounts and bring them under greater scrunity.
Robocash Review: Operating Model
Signing up is straightforward and consists of providing your personal details. Once an account is created, you will need to fund it. Only bank transfers are currently accepted. For people in the UK, a transfer service such as Transferwise or Monese is helpful. This can greatly reduce the amount of commissions paid to the bank, especially for small amounts of cash. This is not an instant service but typically is very quick – 1-2 days.
Once the money is in your account it can be lent out. Robocash differs from other platforms here in that individual loans cannot be invested in. You can create ‘portfolios’ to target the market instead. Most aspects of loans that you want can be specified here. Loan length, interest rate and country are the key variables. You can also choose the maximum amount to allocate to one loan, the size of portfolio and what to do with the repayments (either reinvest or withdraw to cash account).
After this, the ‘robot’ gets to work and allocates your money across a number of loans. Individual loan agreements can’t be seen but as the minimum loan amount is 1 EUR it is obvious that you are buying small pieces of loans along with everyone else. You can also have more than one portfolio running at one time: this allows different elements of loans to be targeted. Once the loans are confirmed, you will be able to see the loan agreement documents on the website.
Although Robocash currently offer loans from four different countries, their treatment is much the same on the website. They are all priced in Euros, and all feature the buy-back guarantee. It is not possible to forgo this for a higher interest rate unlike other sites. The specifics of the buy-back guarantee is that it steps in to repurchase the investor loan once it is 30 days late. This means in theory investors should receive a very smooth flow of income without defaults to worry about. The trade-off here is the reduction in risk, as typically these loans are made at much higher interest rates than the 10-12% received.
How are funds protected?
Money loaned out via Robocash is protected by a buyback guarantee operated by Robocash themselves. The definition of this guarantee is that once a loan goes more than 31 days late, the guarantee kicks in. Your owed principal and interest is repaid by Robocash. This is made possible due to the fact that the differential between the interest rate Robocash receive and pay out is very large.
Clearly, a buyback guarantee is only as good as the company making it. From this point of view, Robocash seem to be profitable and able to afford to maintain buyback on the current level of defaults (and even more considering they are profitable). However, past performance is no guarantee of the future.
A concern will be that Robocash do not fall under the regulation of the Financial Conduct Authority. Instead they are bound by Croatian law. Whilst there may be some arguments on how useful the FCA are, there could be a case that the Croatian equivalent is weaker. If anything were to happen to to the platform, the process for recovery is uncertain.
Robocash Review: Pros
There are a few things to like about Robocash:
The platform is genuinely hands-off – there is not an option for any detailed analysis. This reduces the amount of time needed to maintain it.
Interest rates are high compared to UK platforms and in-line with many other European ones.
Cash drag does not seem to be an issue here. Despite the lack of information about the loans it is clear that the company make many smaller micro loans and as such your money should be invested fairly quickly.
Although still early days, the platform seems to have performed well for investors and there are no issues being raised pertaining to non-payments.
Robocash Review: Cons
There are also some downsides to the platform:
The types of account are limited. It is not possible to hold your investment in an ISA and thus income may be taxable. You can set different portfolios, but within these the options to customise them are not many. Since all loans are bought back, it may not make any difference to returns.
The interest rate has been cut recently to 12%, which places this at a lower rate than some of its competitors.
There may be currency risk. The account operating currency is Euros, but the loans are made out in local currencies. The rate of exchange you may eventually finally receive is not entirely clear, or if this could involve paying a relatively large spread.
Robocash is regulated by Croatian law, which is less well-known and could offer fewer protections than a more well-known regulator.
Conclusion of Robocash Review
More established operators such as Twino and Mintos are in desperate need of competition. It could be the case that Robocash provides it. The platform seems to be profitable and there also seems to be a stock market listing on the way. Recent performances also seem to be solid, with no discernable complaints from investors. On the minus side, interest rates have dropped here to 12% and the operations still fall under a relatively obscure jurisdiction, which means that investors should exercise some caution with regards to the amount they invest.
Disclaimer: This Robocash review represents my own opinions and should not be substituted for investment advice. Please research before you invest with any firm. Typically P2P investments are not covered by the Financial Services Compensation Scheme (FSCS) in the way bank deposits are, and there are no guarantees that you will receive the returns advertised (or even a return at all).