jjc
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Post by jjc on Feb 13, 2017 22:06:15 GMT
Slight curveball perhaps (also for Ed who probably has enough on his plate right now), but given it doesn’t seem to have been mentioned so far despite copious discussion on methods of allocation & bots etc, wouldn’t a lender base management system of some sort be worth contemplating?
eg. MT restrict the number of lenders to X (for eg who they have now) & gently open the sluices to new lenders queued based on new origination / something else
I can see it helping with a number of problems, including the fundamental bizarre underlying one that without it, as what you can invest becomes small & then tiny whilst what rolls off is much larger, popular platforms (that worked so hard to get there) are destined to become first unpopular & then most likely irrelevant to their customer base.
Cruel unresolvable irony or something that can be dealt with?
Appreciate no platform tmk (bar perhaps Z momentarily on deposits?) has tried this yet. But do wonder if that’s more a result of the me-too crazy quest for scale.
And if there isn’t a smarter niche strategy more suited to some platforms..
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jonah
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Post by jonah on Feb 13, 2017 22:14:10 GMT
Platform black (recently renamed?) do something like this... you apply and they consider if they want you to join and have appropriate cash numbers. I assume they also use that to balance demand and supply.
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ben
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Post by ben on Feb 13, 2017 22:31:18 GMT
There is no real issue, the problem is everyone seems to think they need to have a fully invested diversified portfolio immediately and be able to invest in whatever they want. With renewals I never really bother as it is not worth it but there is more then enough new loans issued to get people started, it takes time to get diversified. When investing patience is required.
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am
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Post by am on Feb 13, 2017 22:41:45 GMT
At the moment MT wants more lenders so that they can do bigger loans, and the lenders want more loans so they can have bigger portfolios without overconcentration. Putting a limit on new lenders/money might resolve short term problems of over demand on smaller loans, but it may slow the achievement of the other two objectives.
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jjc
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Post by jjc on Feb 14, 2017 0:01:13 GMT
At the moment MT wants more lenders so that they can do bigger loans, and the lenders want more loans so they can have bigger portfolios without overconcentration.
Interesting view, but not sure I agree. The bigger loan issue ISTM is more constrained by the float. Building the float from profits on a (slowly) growing loan book needs a long runway, it’s by no means a quick fix. The lenders wanting more loans may be in part for the reason you say, but could also be simply because lenders want more of MT loans period (eg because they like them).
I see it as a problem of cake. Everyone likes cake, & there’s a new type of cake in town called p2p which only few people knew about before but now everyone is mad about. MT makes some of the best cake in town. There’s not much of it available, as it’s hand-made using the very finest ingredients sourced from their own highly-trusted specialist suppliers. There are others making cake, some of it good but most of it nothing like as tasty as MT’s. Most of the other cake makers btw, even the ones making piles of it, are losing lots of money. They're probably happy to do this because they foresee such a gigantic cake bonanza up the road that they reckon they can soon sell any old slosh at a nano-penny more than the slosh costs & all those nano-pennies added up will make them very rich.
MT can either try & make a lot more cake (which is hard), try & make a lot more of their cake whilst keeping it as good as it is now (probably impossible, certainly without changing their suppliers if not also the ingredients), try & make a lot more cake & forget about making it anything like as good, or keep making the same very good cake but offer it to fewer customers. (They could ofcourse also decide to make slosh, but let's rule that out for now.)
I was not a very early adopter on MT but iirc when I joined there was about £23k of cake per customer. There are now 2.835 eager customers all queued up waiting for their next slice, which I make <£9k of cake (if all the cake was shared out evenly). Ofcourse because Ed the cake-maker is a fair & fine chap the next slices will be shared out evenly, so we’ll all get much smaller slices. Not so long from now the slices may become so small everyone will be grumbling & one day it'll basically be just crumbs & nobody’ll be happy.
So the question is isn’t there a way for a very good cake maker to stay in business, making fine cakes & also keep its customers happy? And also does Ed the cake-maker really want to go nuts building a (will probably still be okayish & the big advertising budget will certainly say it is) mega cake empire? Or am I thinking about this too simply?
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Feb 14, 2017 0:14:23 GMT
At the moment MT wants more lenders so that they can do bigger loans, and the lenders want more loans so they can have bigger portfolios without overconcentration.
Interesting view, but not sure I agree. The bigger loan issue ISTM is more constrained by the float. Building the float from profits on a (slowly) growing loan book needs a long runway, it’s by no means a quick fix. The lenders wanting more loans may be in part for the reason you say, but could also be simply because lenders want more of MT loans period (eg because they like them). I see it as a problem of cake. Everyone likes cake, & there’s a new type of cake in town called p2p which only few people knew about before but now everyone is mad about. MT makes some of the best cake in town. There’s not much of it available, as it’s hand-made using the very finest ingredients sourced from their own highly-trusted specialist suppliers. There are others making cake, some of it good but most of it nothing like as tasty as MT’s. Most of the other cake makers btw, even the ones making piles of it, are losing lots of money. They're probably happy to do this because they foresee such a gigantic cake bonanza up the road that they reckon they can soon sell any old slosh at a nano-penny more than the slosh costs & all those nano-pennies added up will make them very rich. MT can either try & make a lot more cake (which is hard), try & make a lot more of their cake whilst keeping it as good as it is now (probably impossible, certainly without changing their suppliers if not also the ingredients), try & make a lot more cake & forget about making it anything like as good, or keep making the same very good cake but offer it to fewer customers. (They could ofcourse also decide to make slosh, but let's rule that out for now.) I was not a very early adopter on MT but iirc when I joined there was about £23k of cake per customer. There are now 2.835 eager customers all queued up waiting for their next slice, which I make <£9k of cake (if all the cake was shared out evenly). Ofcourse because Ed the cake-maker is a fair & fine chap the next slices will be shared out evenly, so we’ll all get much smaller slices. Not so long from now the slices may become so small everyone will be grumbling & one day it'll basically be just crumbs & nobody’ll be happy. So the question is isn’t there a way for a very good cake maker to stay in business, making fine cakes & also keep its customers happy? And also does Ed the cake-maker really want to go nuts building a (will probably still be okayish & the big advertising budget will certainly say it is) mega cake empire? Or am I thinking about this too simply? You had to go with the cake analogy didnt you  (Note the irony of the phrase great & good given who then appears) www.youtube.com/watch?v=Xbq3kc29TmgNot sure that the float will survive FCA authorisation given they dont seem to like platforms prefunding loans unless they have minimal balance sheet risk like OC
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SteveT
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Post by SteveT on Feb 14, 2017 7:50:59 GMT
I agree with ilmoro . I foresee a post-Fancy Cakes Authority future where bigger cakes can be baked, but we commit to our slice before the cake is finally iced  |
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elliotn
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Post by elliotn on Feb 14, 2017 8:25:52 GMT
Yes, the icing on the cake would be Ed getting a bigger oven to bake larger cakes with the same appetising ingredients. I'm sure Ed and his pastry chefs are already sweating in the kitchen preparing such recipes. Fairy Cake Approval may mean buying our piece beforehand even if the delectation means ever thinner slices for the hungry hordes wanting to have their cake and eat it. That will be interesting when buying pre-prepared cakes from the BroadCake shop if these can no longer be bought by the chef and taking his bite first. Perhaps ingredient owners wanting to sell quickly will have to wait for the famished to buy first but in no time there will only be crumbs left on the plate, especially if Ed The Chef is unable to stop robots getting a taste for our cakes  . |
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am
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Post by am on Feb 14, 2017 9:59:34 GMT
At the moment MT wants more lenders so that they can do bigger loans, and the lenders want more loans so they can have bigger portfolios without overconcentration.
Interesting view, but not sure I agree. The bigger loan issue ISTM is more constrained by the float. Building the float from profits on a (slowly) growing loan book needs a long runway, it’s by no means a quick fix. The lenders wanting more loans may be in part for the reason you say, but could also be simply because lenders want more of MT loans period (eg because they like them). MT have a work round for the size of the float - they release a loan in multiple tranches. MH has built up quite a value over time, the football stadium would have been several times the float if the original plans had gone ahead, and the size of the float wasn't one of the stated reasons for declining the Cardiff loan. My statement above may involve projecting my position onto other lenders, but if you look at the investor activity tabs on newly released loans you'll see that many participants take up less that the limit set on the loan.
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(Note the irony of the phrase great & good given who then appears)
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