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Post by Butch Cassidy on Mar 2, 2018 10:48:29 GMT
I am no fan of PF’s generally but appreciate that with small unsecured consumer loans it is a vital & essential safeguard to justify the Welendus lending model. The basic PF principle is simply; should a loan not pay back within 7 days of it’s due date then the PF will step in & reimburse the lender THEIR CAPITAL ONLY (no interest) which provides a safety net in case of default. Welendus website states “We only accept borrowers with an estimated default rate of up to 15%. However, we are targeting an average actual default rate of under 10%. We are aiming to achieve our target by maintaining the balance of high risk and low risk borrowers to be lower than the 10% target average using our comprehensive credit and affordability assessment.”
At present the coverage ratio of the PF is of no concern, at just under £50k of funding against outstanding loans of just £46k (as at 2.3.18) details on website, obviously going forward as loan origination increases it will become of vital importance for the platform integrity that this structure remains viable. The 2 most important determining factors to consider will be the default rate & PF size & coverage ratio that will imply. Essentially that relationship will completely depend on the robust nature of the AI credit scoring algorithm, to successfully weed out poor risk borrowers & consequently keep the raw default numbers under control & then how much the PF funding can grow from the platform profitability margin. Of course this is a balance that can be refined over time as actual data is fed into the theoretical modelling but demonstrating a robust PF will be paramount to maintain lender confidence & ultimately platform success.
My main concern going forward is that a 10-15% default rate may prove overly optimistic & substantially higher rates may occur in reality, especially if any serious economic downturns affect the wider economy. I believe however that provided the platform remain vigilant & take early remedial action, that it would still be possible to make their model work, even against such harsher conditions, but only time will tell & I look forward to watching how these challenges are tackled.
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kermie
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Post by kermie on Mar 3, 2018 11:16:32 GMT
Butch Cassidy where do you find the stats on the PF and overall loanbook on the website - I could not see it?
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Post by nsiam on Mar 3, 2018 12:34:31 GMT
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Post by nsiam on Mar 3, 2018 16:44:20 GMT
Also to clarify, the page above is updated live for full transparency.
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Post by Butch Cassidy on Mar 9, 2018 10:36:02 GMT
By way of an early, illustrative update on my portfolio; I currently have had over 380 loan parts in total of which just under 20% have been repaid, they split 25/75% between Sold (PF) & completed (repaid by borrower with interest) this tends to reinforce my belief that a 10% default rate maybe a touch optimistic but it is still very early days & I trust that the AI credit scoring algorithm will learn from the raw data & selections may be improved over time to reduce bad credit risk borrowers. Just for clarity I have often had several small parts of the same loan due to assigning multiple rate funding threads, so my figures may not directly translate to platform default rates.
I still believe that as long as any increased default rate is balanced by increases in the PF funding this can be managed going forward, (PF currently covers approx. 90% of outstanding loanbook total) sufficed to say that I am currently satisfied with this performance & the overall progress the platform are making, so as long as they continue to be in listening mode as & when any issues arise I can foresee a long & successful future for lenders, platform & shareholders alike.
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rzys
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Post by rzys on Mar 9, 2018 20:05:54 GMT
Today the PF balance is £42K.
I could have sworn that it was £49K yesterday.
What's happening?
Or is my memory that bad?
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Post by nsiam on Mar 9, 2018 20:37:23 GMT
Today the PF balance is £42K. I could have sworn that it was £49K yesterday. What's happening? Or is my memory that bad? Hi rzys, as we are using live updates, you will see the numbers fluctuating. You will soon see it going up again. Hope this clarifies. Best, Nadeem
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marka
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Post by marka on Mar 10, 2018 0:08:05 GMT
By way of an early, illustrative update on my portfolio; I currently have had over 380 loan parts in total of which just under 20% have been repaid, they split 25/75% between Sold (PF) & completed (repaid by borrower with interest) this tends to reinforce my belief that a 10% default rate maybe a touch optimistic but it is still very early days & I trust that the AI credit scoring algorithm will learn from the raw data & selections may be improved over time to reduce bad credit risk borrowers. Just for clarity I have often had several small parts of the same loan due to assigning multiple rate funding threads, so my figures may not directly translate to platform default rates.
I still believe that as long as any increased default rate is balanced by increases in the PF funding this can be managed going forward, (PF currently covers approx. 90% of outstanding loanbook total) sufficed to say that I am currently satisfied with this performance & the overall progress the platform are making, so as long as they continue to be in listening mode as & when any issues arise I can foresee a long & successful future for lenders, platform & shareholders alike. I have to say that you're a lot more optimistic than me. I am close giving up on welendus (at least for now) The loans late by under/over 7 days disappeared from the stats page a day or two ago, and I can only guess this was because the percentage over 7 days was embarrassingly creeping up to the high 20s percent, meaning in effect that we earn no interest on over a quarter of our loans. Then mid afternoon today I got no less that 18 emails telling me that a loan had been covered by the PF, but when I went to look at my investment details I was still fully invested (except for a quid or so of interest) so were these emails all playing catch up with loans that had gone bad some time ago? Who knows. I could have tried to tie up the loans numbers in the email to my loans, but those are not easily visible in my loan analytics page without clicking through and scrolling and generally buggering about. Roll forward to this evening and the amount of interest I have earned has gone up by a whole 3p but yet my amount of cash queued has gone up by about £135. Is this (some of) the loans that I got the emails about earlier finally being reflected on my view of my investments, or is it another batch of loans that have been bought by the PF but I haven't had emails about yet? With a current XIRR of 1.04% there's very little tempting me stay and a whole load of frustration pushing me away. I'm resisting that "Withdraw Investments" button for now, but my patience won't last for ever.
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Post by Butch Cassidy on Mar 10, 2018 1:30:45 GMT
Perhaps just realistic rather than optimistic - this is a start up platform that has only been live for less than 2 months & is still in the development stage, with any losses being covered by the PF, at least so far in my experience, perhaps you need to question whether you have the temperament for this sort of P2P risk? Why not wait until the early stages are already proven (or not) & then reinvest when the outcomes are more predictable?
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Post by nsiam on Mar 10, 2018 9:27:51 GMT
By way of an early, illustrative update on my portfolio; I currently have had over 380 loan parts in total of which just under 20% have been repaid, they split 25/75% between Sold (PF) & completed (repaid by borrower with interest) this tends to reinforce my belief that a 10% default rate maybe a touch optimistic but it is still very early days & I trust that the AI credit scoring algorithm will learn from the raw data & selections may be improved over time to reduce bad credit risk borrowers. Just for clarity I have often had several small parts of the same loan due to assigning multiple rate funding threads, so my figures may not directly translate to platform default rates.
I still believe that as long as any increased default rate is balanced by increases in the PF funding this can be managed going forward, (PF currently covers approx. 90% of outstanding loanbook total) sufficed to say that I am currently satisfied with this performance & the overall progress the platform are making, so as long as they continue to be in listening mode as & when any issues arise I can foresee a long & successful future for lenders, platform & shareholders alike. I have to say that you're a lot more optimistic than me. I am close giving up on welendus (at least for now) The loans late by under/over 7 days disappeared from the stats page a day or two ago, and I can only guess this was because the percentage over 7 days was embarrassingly creeping up to the high 20s percent, meaning in effect that we earn no interest on over a quarter of our loans. Then mid afternoon today I got no less that 18 emails telling me that a loan had been covered by the PF, but when I went to look at my investment details I was still fully invested (except for a quid or so of interest) so were these emails all playing catch up with loans that had gone bad some time ago? Who knows. I could have tried to tie up the loans numbers in the email to my loans, but those are not easily visible in my loan analytics page without clicking through and scrolling and generally buggering about. Roll forward to this evening and the amount of interest I have earned has gone up by a whole 3p but yet my amount of cash queued has gone up by about £135. Is this (some of) the loans that I got the emails about earlier finally being reflected on my view of my investments, or is it another batch of loans that have been bought by the PF but I haven't had emails about yet? With a current XIRR of 1.04% there's very little tempting me stay and a whole load of frustration pushing me away. I'm resisting that "Withdraw Investments" button for now, but my patience won't last for ever. Hi marka , the 7 days statistics are coming back. You may have noticed we moved the information to be easily accessible for our lenders. This is being enhanced further and will be added back very soon. Now the missed payments over 7 days late did jump straight from ~10% to 25% due to the data set size being too small and easily affected with weekly performance. Many of last week's missed payments are getting in touch with us to make their payments this week, so they are not bad loans. We just take actions quickly to protect our lenders. With regards to the PF cover emails and having ~£0 queue balance, this may be due to cached browser data. To avoid this, you can click (Shift + Refresh) together to load the page without cache. The queued £135 balance is the affected balance by the emails you received (Both are triggered at the same time). On the number of email, we will soon aggregate these emails into one email to make it easier to review. We got your comment on the analytics on the other thread and we are taking action and will be introducing new features very soon which will include an "Export" button so lenders can download the data and use it as they prefer. as you may have already noticed, Welendus is one of the most complex and technically sophisticated peer-to-peer lending platforms out there. Very soon you will start noticing the advantages this will bring to our lenders. With this in mind, Welendus is still at a beta stage mainly to build and enhance it's feature around our user needs. We are listening and taking all your comments and feedback on-board. You may have already noticed the new updates being released to address some of our user feedback we get here. But that is not all, we will very soon be releasing new features that will give our lenders much more control over their portfolio with a new "sell loan" feature, to a variable PF grace, adjustable diversification options and an all new Auto-bid feature. We are not ending our beta period before we make sure our users (specially the P2P forum community) are happy and excited about Welendus as we are. Best, Nadeem
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rzys
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Post by rzys on Mar 10, 2018 10:06:11 GMT
Nadeem, it would be worth you investing a bit of time with a dictionary...
Cash = money
Cache = something stored
Provision = something planned or available to be provided
Provisional = temporary arrangement, subject to change.
Is yours a Provision Fund, or provisional?
Such subtlety in language; such a vast difference in meaning!
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Post by nsiam on Mar 10, 2018 10:28:28 GMT
Nadeem, it would be worth you investing a bit of time with a dictionary... Cash = money Cache = something stored Provision = something planned or available to be provided Provisional = temporary arrangement, subject to change. Is yours a Provision Fund, or provisional? Such subtlety in language; such a vast difference in meaning! True, thanks for the heads up. To answer your question its Provision Fund. Thanks for highlighting the error here. Not sure if its good or bad, but I am better with numbers than words.
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marka
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Post by marka on Mar 10, 2018 13:47:05 GMT
Perhaps just realistic rather than optimistic - this is a start up platform that has only been live for less than 2 months & is still in the development stage, with any losses being covered by the PF, at least so far in my experience, perhaps you need to question whether you have the temperament for this sort of P2P risk? Why not wait until the early stages are already proven (or not) & then reinvest when the outcomes are more predictable? We obviously have different opinions on what constitutes optimism ("I can foresee a long & successful future") and realism, and that opinion may well be contingent upon whether or not an investment in the platform is held via Seedrs. I have spent the last twenty odd years working in financial IT (in a wide range of sectors and for startups to blue chips) and I do not consider the platform to have been worthy of pilot/beta, partly for lack functionality/poor design and partly for lack of clarity on the actual deal offered to lenders. However the fact that I have persevered shows that I do still believe that it has potential, but that belief is constantly being eroded by the numerous issues that have come to light.
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marka
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Post by marka on Mar 10, 2018 13:56:08 GMT
I have to say that you're a lot more optimistic than me. I am close giving up on welendus (at least for now) The loans late by under/over 7 days disappeared from the stats page a day or two ago, and I can only guess this was because the percentage over 7 days was embarrassingly creeping up to the high 20s percent, meaning in effect that we earn no interest on over a quarter of our loans. Then mid afternoon today I got no less that 18 emails telling me that a loan had been covered by the PF, but when I went to look at my investment details I was still fully invested (except for a quid or so of interest) so were these emails all playing catch up with loans that had gone bad some time ago? Who knows. I could have tried to tie up the loans numbers in the email to my loans, but those are not easily visible in my loan analytics page without clicking through and scrolling and generally buggering about. Roll forward to this evening and the amount of interest I have earned has gone up by a whole 3p but yet my amount of cash queued has gone up by about £135. Is this (some of) the loans that I got the emails about earlier finally being reflected on my view of my investments, or is it another batch of loans that have been bought by the PF but I haven't had emails about yet? With a current XIRR of 1.04% there's very little tempting me stay and a whole load of frustration pushing me away. I'm resisting that "Withdraw Investments" button for now, but my patience won't last for ever. Hi marka , the 7 days statistics are coming back. You may have noticed we moved the information to be easily accessible for our lenders. This is being enhanced further and will be added back very soon. Now the missed payments over 7 days late did jump straight from ~10% to 25% due to the data set size being too small and easily affected with weekly performance. Many of last week's missed payments are getting in touch with us to make their payments this week, so they are not bad loans. We just take actions quickly to protect our lenders.With regards to the PF cover emails and having ~£0 queue balance, this may be due to cached browser data. To avoid this, you can click (Shift + Refresh) together to load the page without cache. The queued £135 balance is the affected balance by the emails you received (Both are triggered at the same time). On the number of email, we will soon aggregate these emails into one email to make it easier to review. We got your comment on the analytics on the other thread and we are taking action and will be introducing new features very soon which will include an "Export" button so lenders can download the data and use it as they prefer. as you may have already noticed, Welendus is one of the most complex and technically sophisticated peer-to-peer lending platforms out there. Very soon you will start noticing the advantages this will bring to our lenders. With this in mind, Welendus is still at a beta stage mainly to build and enhance it's feature around our user needs. We are listening and taking all your comments and feedback on-board. You may have already noticed the new updates being released to address some of our user feedback we get here. But that is not all, we will very soon be releasing new features that will give our lenders much more control over their portfolio with a new "sell loan" feature, to a variable PF grace, adjustable diversification options and an all new Auto-bid feature. We are not ending our beta period before we make sure our users (specially the P2P forum community) are happy and excited about Welendus as we are. Best, Nadeem Thanks for another quick response Nadeem - your willingness to interact on here is one area that cannot be criticised. However I have to take issue with the statement I have bolded. If it is going to continue to be common for borrowers to be over 7 days late with a payment, but for their account to then be normalised again soon afterwards, its not really the lenders that are being (directly) protected, its the provision fund, and lenders are just going to get their initial investment back with no return on it. I'm going to leave my current investment in place until it has all had the opportunity to be lent out for a 3 month loan at least once, and thus earned the bulk of the interest on the final bullet payment, and will then take a view according to the actual rate of return seen on it.
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Post by sayyestocress on Mar 12, 2018 8:31:00 GMT
...If it is going to continue to be common for borrowers to be over 7 days late with a payment, but for their account to then be normalised again soon afterwards, its not really the lenders that are being (directly) protected, its the provision fund, and lenders are just going to get their initial investment back with no return on it. That's a good point but won't it be resolved once the "variable PF grace" feature is implemented? I take it to mean we can delay the PF kicking in and give more of a chance for the repayment to be made so we make a (delayed) return?
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