Nibble Review – How Flexible Investment Works

How Does Nibble Work?

Nibble Finance operates within the financial technology (FinTech) industry, where it leverages its affiliation with ITSF to offer a distinct investment product. The platform specializes in allowing investments in microloans issued by companies within the ITSF group. These short-term loans come with relatively high interest rates, enabling investors potentially to achieve an attractive return on investment compared to traditional bank deposits.

User Interface and Functionality

First impressions can significantly affect a user’s overall experience with a digital platform, and Nibble Finance doesn’t disappoint. The platform’s design is sleek and minimalistic, which enhances navigability and usability. The dashboard is intuitive, providing investors with vital information about their investments, including the loan portfolio, accumulated interest, and expected return.

Functionality-wise, Nibble Finance excels. The sign-up process is quick and straightforward, and investors can easily transfer funds to the platform. Investment products are presented clearly, enabling investors to choose from available loans with varying terms and interest rates. Overall, the user journey from sign-up to investing is well-guided and intuitive.

Auto-Investment Strategies

One of the key innovations is the flexible investment feature, designed to make investing as hassle-free as possible. This feature allows investors to set their desired investment parameters, such as investment amount, loan duration, and interest rate. The system then automatically allocates their investments across various loans that meet these criteria. This not only saves time but also ensures a diversified portfolio, which can potentially mitigate risk.

Furthermore, the platform operates with a “skin in the game” model. The ITSF group companies, which issue the loans available for investment on Nibble Finance, retain a portion of each loan on their balance sheets. This aligns the interests of the platform, the loan originators, and the investors, providing an additional layer of security for investors.

The Flexible Investment product includes three investment strategies – Classic, Balanced and Legal. The strategies differ in the ratio of risk to profitability and based on previous periods’ results.

For each strategy, loans are selected according to their level of risk of going into arrears. On the Nibble website you can find a diagram showing the breakdown of lows based on their risk profile and what goes into each strategy.

Classic Strategy

You invest in unsecured consumer loans classified as AA, A, BB, for which the borrower’s risk of going into a payment delay is very low. With the buyback guarantee, you are protected from risks and receive a guaranteed income at a fixed interest rate.

Balanced Strategy

These are investments in consumer loans classified as BB, B and CC. As a rule, the degree of risk of non-repayment of a loan under this strategy is minimal though NPL 30 and NPL 60 might occur. However, they are nearly always paid back. The default risk for this strategy is low, but the income is significantly higher than that of the strategy with fixed income.

Legal Strategy

The litigation and recovery process takes a long period of time, so the minimum investment period is 6 months. The litigation and collection management is provided by Boostr. More on this strategy below.

To be fully transparent, Nibble has described all the risks investors bear under each strategy. More information on the strategies can be found on the Nibble website.

Nibble Introduces High-Yield Investments

In 2023, Nibble ITSF introduced a revolutionary Legal Strategy for private investors to invest in debts. Debt Investments are not reserved for banks and financial institutions anymore!

All high-yield debt investment portfolios are covered with 8% guaranteed returns. The new debt investment strategy offered by Nibble is designed to deliver to private investors appropriate assets to diversify their investment portfolio and earn lucrative returns. This investment proposal is called Legal Strategy. It provides investors with a unique opportunity to invest in the debt market without the need for intermediaries such as banks or financial institutions. With this new feature, Nibble investors will be able to invest in secure debt portfolios and earn a guaranteed passive income on their investments.

The Legal Strategy is designed for investing in portfolios consisting of consumer loans classified as B, CC, and C, which are in the process of pre-trial and judicial recovery. Since these loans have overdue debts and fines, the yield of this strategy reaches up to 14.5% per annum. All assets are covered with a minimum of 8% Deposit back guarantee.
The litigation and recovery process takes an extended period, so the minimum investment period is from 6 to 12 months. 

Risks & Guarantees:
*Including the risk of non-repayment of the loan/default of the entire loan amount

• The strategy comes with the Deposit back guarantee – this is the obligation of the collection agency to return the full investment amount at the end of the investment period and ensure a minimum yield of 8% per annum.
• Due to investment into a portfolio consisting of a large number of loans, the risk of not receiving income from several contracts is reduced as they are covered by other loans.
• Daily interest accrual at 8% per annum, payouts every 90 days according to the received yield up to 14.5% per annum.
• During the fundraising process for a portfolio purchase, we accrue income at 8% per annum. This is your bonus yield to the main one which goes up to 14.5%. The maximum term for fundraising to purchase a portfolio is 30 days.

How to Invest in the Legal Strategy

The process of investing in Legal Strategy is fully automated. Go through a simple registration and immediate verification procedure. Choose the Legal Strategy and a portfolio to invest in according to portfolio preferences. Top up an investment portfolio with any amount from €50 up to €10,000 monthly. Nibble does not charge any commission for financial transactions.

While the portfolio is in the fundraising process, an interest of 8% per annum is accrued daily. After the end of the fundraising process, investors continue receiving daily interest at a rate of 8% per annum and every 90 days, Nibble automatically calculates the actual yield of portfolios and grants the difference between the guaranteed rate of 8% and the actual rate of up to 14.5% to the investors’ accounts. Thus, every 90 days you receive an income ranging between 8% and 14.5% in your Nibble account.

Example: By investing 1000 euros for 12 months, at the end of the term investors get back the entire capital of 1000 euros and receive an income between 80 and 145 euros, which will be added straight to their Nibble account.

How Does the Debt Investment Market Work?

Understanding what the debt investment market is and how it works is crucial if you want to invest in Nibble’s Legal Strategy.

I did some research myself and found it pretty interesting to know what happens when loans go bad. Here’s the lowdown.

Any financial company specializing in lending inevitably faces loans that are not repaid within the terms specified in the contract. Many companies sell such loans in large portfolios at auctions with an 85% discount, to quickly return a part of the money to the business.

Since 2019, auction platforms specializing in the sales of debt portfolios, such as Debex and NLPBroker, have begun actively appearing on the European market, which demonstrates the growth of the market. Also, there are many other collection agencies on the market specializing in debt recovery.

For investment portfolios offered through the Nibble platform within Legal Strategy, collection, and litigation management are performed by BOOSTR. Boostr is a company that buys overdue loans from banks and MFOs at auctions, with a discount of 85%, and automates the process of extrajudicial and legal recovery. Thanks to the deep experience and technologies developed by Boostr, it is possible to achieve a high percentage of capital return. The company draws on more than 5 years of successful experience in the area of debt collection.

1. Boostr buys overdue loans from banks and MFOs at auctions, with a discount of 85%.
2. The agency contacts the borrower and tries to agree on the return of the debt extrajudicially.
3. If it is not possible to find a solution out of court, then Boostr initiates an automated process of recovering debt by initiating legal proceedings to obtain a court decision on the debt collection from the debtor.

After the issue of a judicial order, debt, interest, and fines are collected through the bailiff services and banks.

Risks & Guarantees

Despite the potential for high returns, investing through Nibble Finance does come with inherent risks, as does any form of investing. Firstly, the return on investment is not guaranteed, and investors could potentially lose some or all of their capital.

Secondly, while Nibble Finance does have a BuyBack guarantee in place to protect investors against borrower default, it’s important to note that this guarantee is only as strong as the financial stability of the loan originator. If the originator experiences financial difficulties, it may be unable to honor the BuyBack guarantee.

Only the Classic Investment Strategy has a buyback guarantee. The guarantee provided by creditor companies forms a reserve fund, both in Russia (where it is mandatory by law) and in Spain, which covers the risks of loan defaults and provides a buyback.

Loan Originators

Joymoney, another brand owned by IT Smart Finance, provides the pipeline for loans. These loans are given in Russia, Spain and Mexico. These are not great markets in terms of default rates, so I would expect a high-interest rate for my money given the extra risk involved.

Support

Support is provided via email, phone and chat, as is standard within the industry.

The customer support team is responsive and capable of addressing issues or queries efficiently, reflecting a strong commitment to customer service.

Security & Compliance

In the world of online investments, the security of a platform is crucial. Thankfully, Nibble Finance demonstrates a commitment to investor security through several measures. The platform uses HTTPS encryption to secure data during transmission, and as mentioned earlier investor funds are protected through a BuyBack guarantee in the case of the Classic Strategy. While the guarantee does not eliminate risk entirely, it does provide some protection to investors in the event of borrower default.

Nibble Finance complies with relevant EU regulations, and the loan originators in the ITSF group are regulated financial institutions in their respective countries. This commitment to regulatory compliance adds an additional layer of trustworthiness to the platform and its operations.

Team

The platform operates under the law of the Republic of Estonia and its main team is listed on the website, together with a description of each individual’s role and his/her experience in the industry. I like this, and they do seem to have a strong team in place.

While their legal address is in Tallinn, the team operates from Barcelona.

Funding Your Account

Investors can top up their balance via Visa / Mastercard, as well as by bank transfer. No problems whatsoever here, and if you use my favorite online banks you will get your SEPA transfers free of charge:

• N26
• Wise
• Revolut

If you’re based in Spain, you might also be interested in checking out my dedicated article about Spanish commission-free bank accounts.

Nibble Alternatives

There are many excellent alternatives to Nibble that have all been around for a while, with Mintos leading the pack. Swaper and Peerberry are also platforms I would recommend checking out as they operate with a similar model for P2P lending but have a longer track record than Nibble.

However, if what you read in this review together with the information and model presented on the Nibble site inspires confidence, I see no obvious reason not to invest some money in Nibble.

Conclusion

Nibble Finance presents an innovative and attractive option for individuals looking to diversify their investment portfolios. The platform’s high level of transparency, commitment to security, and user-friendly interface make it a noteworthy player in the P2P lending space.

The platform’s core appeal lies in its economic model. By investing in short-term microloans, investors can potentially earn higher interest rates than what traditional bank deposits offer. The platform provides an auto-invest feature, which automatically diversifies an investor’s portfolio across different microloans.

However, it’s important to note that investments through Nibble Finance carry inherent risk. The projected returns are not guaranteed, and the capital invested can be at risk. Therefore, the platform may be more suited to investors who understand and are willing to accept these risks in return for high rates.

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