james
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Post by james on Jul 25, 2014 5:53:21 GMT
Bots and other automated tools. What's your view of these?
My own view is pretty straightforward: that they exploit the pure human participants to the detriment of the platform as a whole, taking profit from the humans and delivering it to the bot operator. For this reason my view is that they should be banned and the system implemented with built in delays and limits on parallelism that make it harder to use them.
The issues they cause are many and varied but a couple of examples may be useful:
1. Denial of service near to the end of bidding. Bots swamping the bidding system with large numbers of parallel smallish bids that cause response failures or slow response times so that the pure human participants can't get current prices or make bids with reasonable success rates, while the bots just use lots of parallelism and repeats to get in.
2. Bots monitoring for new auctions and filling the desirable ones with multiple bids then reselling the loan parts on the secondary market. This problem is exacerbated if it is known that an auction will finish as soon as the desired amount has been offered. Bondora ended up suffering from this problem twice. The current reasonably effective solution in one part of the Bondora market, the main one, not the Bondora+ one, is to have Bondora-operated biding tools available to all lenders make all of their bids before a loan is announced as available. In the main markets this is sufficient to eliminate the issue.
3. Exploiting human response times on the secondary market. It's normal on Bondora to sell loans with late payments at a reduced price, often a discount. that discount depends in part on the time since last payment and can be in excess of 20%, though 10% is more common. A bot can be used to monitor the market and buy those loans once a payment shows up, improving the value of the loan before the seller has time to react. Bondora has not yet solved this problem, the resolution would be to suspend the offer to sell once a payment is made. Non-automated humans can also do this, the same fix is effective for that, helping to ensure that the market is between equally informed seller and buyer.
In general I don't participate in markets where bots operate because I know that my own response times and times when I'm looking and potentially bidding can't beat a computer's.
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Post by ablrate on Jul 25, 2014 8:30:29 GMT
What steps does the business take to protect itself and its lending customers from systemic risks such as a major flaw being found in the design of a safety-significant part of an aircraft type that may be heavily present in the leased fleet? I'm thinking of issues such as the 737 rudder reversals, ATR icing-related control problems or unexpectedly short airframe life. Hi james When an aircraft is identified for purchase for onward lease it undergoes an appraisal by engineering experts on behalf of the purchasor. This exercise is repeated by the lessee airline, so both are assured of the integrity of the aircraft. There are voluminous documents relating to maintenance of the aircraft and these are examined by all parties. If there is any known fault of the type it is at this stage that engineers will ensure that any remedial action required to fix the issue has been undertaken (as in the case of the icing-related issues). From the perspective of an Ablrate lender, the loan is to the lessor in most, if not all cases and is secured against the underlying aircraft transaction. If the aircraft is grounded by the authorities the lessee will still pay the lease and the lessor will still pay the interest and capital owed to lenders, banks etc. Depending on what the issue is, and if there is a significant grounding, the manufacturer may pay compensation (as in the case of the Dreamliner and batteries issues). The lessor may use maintenance reserves to sort the fix or the lessee (if they run their own maintenance facilities) will sort the fix and adjust any maintenance reserves if such a fix is agreed to be a shared cost with the lessor. Standard lease terms run into 100+ pages and have issues like this well mapped out. It is important to note that the type of aircraft which are generally going to be on Ablrate (regional turbo props) have done millions of miles of flying on the type, and although there have been issues (as there is with all aircraft), the machines are well known entities to lessors and airlines.
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Post by ablrate on Jul 25, 2014 9:59:34 GMT
The core design of the bidding system looks reasonable, particularly the highest rate used by all part, which helps to combat the problem of winner's curse, where the lowest bidders get the loan but the find that they have overvalued it, losing by winning in the auction. ......... Hi james Thanks for the exceptional feedback. 1. That is an interesting point, in that to ensure your bid is successful you could bid at the lowst rate range. In this way you can't be outbid. However, this may be a benefit for users who really like the loan and don't want to lose the opportunity... we will have to see how this works in practice, although we are encouraging fixed rate loans as it seems to be what users in general want. 2. I can see how people are getting auction weary, that seems complicated. Our auctions will have a range set by the borrower but we will be looking at these to make sure they are sensible. Large interest rate offers maybe great, but the transaction must be economically capable of sustaining such a rate. This is something that we will watching carefully as attracting customers with large rates is less an objective than making sure the default rate is minimal. 3. Minimum bid rates. It's an interesting point but something that we believe will be taken care of by the range on each auction based loan. In a leasing transaction (or any transaction for that matter) the economics are a calculation we would work out and know whether interest offered is sustainable, in fact it is something that we will be baking in to the platform in the loan request stage. It will allow us to automatically flag loan requests that are being proposed at levels outside our parameters - giving us cause for extra due diligence on that loan request and either to reject it at input stage or detail such economic risk to customers. The tax-related issues are a problem. As you point out however a 'tax wrapper' is something that would equalize this. Without giving too much detail, we are in discussions to provide something a little different to the space that will address the SIPP/ISA issue in a different way than most.... but we will be announcing that when it's done and right now we are in the early stages. Thanks for the feedback on multiple loans. I think from our perspective it is unlikely that this will occur. Mainly because each transaction is distinct. So if a lessor is purchasing an aircraft or capital equipment for example and requires the mezz level, they would require it before such a transaction takes place and so would need to draw down all at the same time. There is a point there on refinancing equity and that is something we will be watching, thanks. Our advantage in supply of loans, is that we have an enormous pipeline of business. There is a transaction pipeline presently of 60 million that we could put through the platform, most of these loans would be in the 250,000 - 750,000 level but sadly right now it is the chicken and the egg in that there is no point submitting these loan requests until we have the placing firepower through lenders, but we may not attract those lenders until we have those loans placed on the platform. What are your thoughts on this? Should we place a number of loan requests on the platform at that level now, with the idea that these loans would attract investors, or should we be sizing our loans at a smaller level so they have a reasonable chance at a fill? (right now we are sourcing loans from 30k - 100k) Awesome feedback james, thanks very much
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Post by ablrate on Jul 25, 2014 10:23:51 GMT
Bots and other automated tools. What's your view of these? My own view is pretty straightforward: that they exploit the pure human participants to the detriment of the platform as a whole, taking profit from the humans and delivering it to the bot operator. For this reason my view is that they should be banned and the system implemented with built in delays and limits on parallelism that make it harder to use them. The issues they cause are many and varied but a couple of examples may be useful: 1. Denial of service near to the end of bidding. Bots swamping the bidding system with large numbers of parallel smallish bids that cause response failures or slow response times so that the pure human participants can't get current prices or make bids with reasonable success rates, while the bots just use lots of parallelism and repeats to get in. 2. Bots monitoring for new auctions and filling the desirable ones with multiple bids then reselling the loan parts on the secondary market. This problem is exacerbated if it is known that an auction will finish as soon as the desired amount has been offered. Bondora ended up suffering from this problem twice. The current reasonably effective solution in one part of the Bondora market, the main one, not the Bondora+ one, is to have Bondora-operated biding tools available to all lenders make all of their bids before a loan is announced as available. In the main markets this is sufficient to eliminate the issue. 3. Exploiting human response times on the secondary market. It's normal on Bondora to sell loans with late payments at a reduced price, often a discount. that discount depends in part on the time since last payment and can be in excess of 20%, though 10% is more common. A bot can be used to monitor the market and buy those loans once a payment shows up, improving the value of the loan before the seller has time to react. Bondora has not yet solved this problem, the resolution would be to suspend the offer to sell once a payment is made. Non-automated humans can also do this, the same fix is effective for that, helping to ensure that the market is between equally informed seller and buyer. In general I don't participate in markets where bots operate because I know that my own response times and times when I'm looking and potentially bidding can't beat a computer's. Hi james I think there is an advantage to using automated tools, however, they should be able to be used by all and shouldn't allow an advantage for one lender over another. That is our overall philosophy, utopian as it may sound. We aim to build tools that make the experience on Ablrate user friendly and allow lenders to manage a portfolio of quality asset backed loans efficiently, to do this there will be a certain amount of automation, but not to the point where you have to be an MIT grad to figure it out. Also, we believe that the issue of bots will be dulled by having sufficient supply of loans. It would seem that those aiming to game the system by buying up loans and flipping them in the secondary market can do so if loans are in short supply, but if there is adequate loans for the allocation of capital required by the lender base, then bots would have trouble making the market that they would be attempting to do, unless, of course those behind the bots had very deep pockets.... and that is something that will be monitored. In any event, right now we are some time away from having an API for automated tools to take up loans, and before we do design that in we will be spending a lot of time on the issues you have pointed out and those that have been highlighted in our research. We have chosen to disqualify loans that are behind on payments for listing on the secondary market, to solve just that issue of bots taking advantage. Although our secondary market really will operate as a true market, if loans are behind on payments the major objective is to bring it back to a proper status, rather than have a speculator situation where the more risk-on lenders could take advantage of those with less experience or capital. It may seem counter intuitive to the market philosophy we want there to be but think of the secondary market ban on late payments loans like the stock market suspension; 'Stock suspended on clarification of financial matters', was the old mantra I believe. Once its out of suspension it can be traded again. I would be interested to here people's point of view on this. james... thanks again, this feedback is all gold. Regards Ablrate
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james
Posts: 2,205
Likes: 955
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Post by james on Jul 26, 2014 2:41:42 GMT
Our advantage in supply of loans, is that we have an enormous pipeline of business. There is a transaction pipeline presently of 60 million that we could put through the platform, most of these loans would be in the 250,000 - 750,000 level but sadly right now it is the chicken and the egg in that there is no point submitting these loan requests until we have the placing firepower through lenders, but we may not attract those lenders until we have those loans placed on the platform. What are your thoughts on this? Should we place a number of loan requests on the platform at that level now, with the idea that these loans would attract investors, or should we be sizing our loans at a smaller level so they have a reasonable chance at a fill? (right now we are sourcing loans from 30k - 100k) I think that you are right to start small. One thing that lenders will want to do is diversify their lending over a large number of loans. At the moment you can best facilitate that and encourage growth using a selection of smaller opportunities with perhaps the occasional larger one. It's also a good idea for you to ensure that only a few requests don't get completely met because otherwise you'll tend to discourage lenders who consider them but don't end up lending after all. If you read discussions here you'll find that setups that have larger opportunities have a variety of ways to try to assess whether the opportunity will be fulfilled and encourage it. Things like provisional bids to indicate interest that can be converted if the amount exceeds the target are one. I may comment further on your other replies later but I think that your answers were good ones, at least for my own preferences, maybe not for others.
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Post by ablrate on Jul 26, 2014 18:27:28 GMT
Cheers james
By the way all, we have now uploaded the driving license option for ID verification.
Regards Ablrate
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Vero
Member of DD Central
Posts: 196
Likes: 163
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Post by Vero on Jul 26, 2014 20:02:43 GMT
I found signing up simple and straightforward, even the captcha (I am partially sighted and can often be found cursing captchas!)
I used a passport number: very clear, easy and quick - even with very little sight at the moment (due recent surgery).
Other online investment sites, including p2p/crowd sites, have asked for passport and/or driving licence ID, and sometimes more, as:
- an uploaded scanned electronic copy (no big deal) - an emailed scanned electronic copy (no big deal) - a posted hardcopy (a little annoying) - a posted, verified hardcopy (more annoying) - a posted, notarised hardcopy (costly, time consuming, and infuriating!)
One of them hinted that my being a company director triggers further ID checks, not sure if that is correct.
A simple passport/licence number is one thing; but a copy of the whole ID page gives far more information, including my photo!
I have to send these each time I take out a mortgage, instruct a new solicitor, various other transactions - every day business type stuff. I get verified hardcopies in bulk, both easier and cheaper, but they are only valid for 3 months, so it's still a pain.
Anyway, this must be one of the simpler sign ups I've had, and I thought the UI was great too - clear and easy to navigate, even for a blindy.
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Post by ablrate on Jul 27, 2014 8:44:56 GMT
Thanks veronicae. It's great to get feedback, we did have an issue with the sign up process but with the feed from users we out in some fixes that appear to have made it easier.
Thanks again. Ablrate
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Post by mogzi on Jul 27, 2014 10:14:36 GMT
Thanks veronicae. It's great to get feedback, we did have an issue with the sign up process but with the feed from users we out in some fixes that appear to have made it easier. Thanks again. Ablrate Maybe you can rewrite that to make it make a little sense when read for the first time!
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Post by elljay on Jul 27, 2014 10:26:51 GMT
Thanks veronicae. It's great to get feedback, we did have an issue with the sign up process but with the feed from users we out in some fixes that appear to have made it easier. Thanks again. Ablrate Maybe you can rewrite that to make it make a little sense when read for the first time! s/out/put
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Post by ablrate on Jul 27, 2014 11:18:09 GMT
I found signing up simple and straightforward, even the captcha (I am partially sighted and can often be found cursing captchas!)
I used a passport number: very clear, easy and quick - even with very little sight at the moment (due recent surgery).
Other online investment sites, including p2p/crowd sites, have asked for passport and/or driving licence ID, and sometimes more, as:
- an uploaded scanned electronic copy (no big deal) - an emailed scanned electronic copy (no big deal) - a posted hardcopy (a little annoying) - a posted, verified hardcopy (more annoying) - a posted, notarised hardcopy (costly, time consuming, and infuriating!)
One of them hinted that my being a company director triggers further ID checks, not sure if that is correct.
A simple passport/licence number is one thing; but a copy of the whole ID page gives far more information, including my photo!
I have to send these each time I take out a mortgage, instruct a new solicitor, various other transactions - every day business type stuff. I get verified hardcopies in bulk, both easier and cheaper, but they are only valid for 3 months, so it's still a pain.
Anyway, this must be one of the simpler sign ups I've had, and I thought the UI was great too - clear and easy to navigate, even for a blindy.
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Post by ablrate on Jul 27, 2014 11:22:11 GMT
Hi Veronicae.
My sincere apologies for the typing error earlier. Veronicae we did have an issue with our signing in process and after feedback from our users we were able to implement some fixes that have made it a lot easier and user friendly now.
Regards
Ablrate
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Vero
Member of DD Central
Posts: 196
Likes: 163
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Post by Vero on Jul 27, 2014 12:21:27 GMT
Hi Veronicae. My sincere apologies for the typing error earlier. Veronicae we did have an issue with our signing in process and after feedback from our users we were able to implement some fixes that have made it a lot easier and user friendly now. Regards Ablrate ablrate, I'm not one to complain about typos (I'm more likely to be making them!) - your message made sense to me, typos or not, no apology required.
The complaint was made by mogzi.
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badersleg
Member of DD Central
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Post by badersleg on Jul 27, 2014 14:55:14 GMT
Is anyone else having problems adding their address? I enter my postcode and get the window with the list of addresses, but when I click on my house nothing happens. I get a "javascript:void(0)" in the bottom left of my screen, which probably isn't a good sign.
Regards,
Tim
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Post by ablrate on Jul 27, 2014 16:40:00 GMT
Is anyone else having problems adding their address? I enter my postcode and get the window with the list of addresses, but when I click on my house nothing happens. I get a "javascript:void(0)" in the bottom left of my screen, which probably isn't a good sign. Regards, Tim Hi Tim Sorry you are having issues. I have reported to the developers and will see what is up and get a fix, we have a couple of third party API's in there (the postcode look up being one) and it could be one of these, can you let us know which browser you are using to see if it is specific to one? Thanks for the feedback, will get onto it now. If you would like a fix now to get registered, please send your address details etc to admin@ablrate.com and we can complete the process for you. Otherwise I will get back to you as soon as it is fixed. Regards Ablrate
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