blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Nov 12, 2014 9:52:52 GMT
How FC must wish that they could deal with just whole loan lenders and set-and-forget Autobidders and autosellers, rather than having to put up with those few pesky manual bidders who are always picking holes in things and complaining when the slightest thing goes wrong. They could offer everything first to the wholeloaners and feed the rejects to the Autobidders. No need to worry about the on-line responsiveness of the platform, or the glitches and c*ck-*ps in the marketplace, or distribution of repayments. As long as the site looked ok and worked roughly right eventually, no-one would be really bothered.
If I were FC and realised that I could not run, or could not afford to run, a good-quality real-time system which keeps up with market developments, then I would start project Dinosaur, aimed at extinguising the need for manual bidders and sellers.
|
|
|
|
Post by davee39 on Nov 12, 2014 10:49:08 GMT
How FC must wish that they could deal with just whole loan lenders and set-and-forget Autobidders and autosellers, rather than having to put up with those few pesky manual bidders who are always picking holes in things and complaining when the slightest thing goes wrong. They could offer everything first to the wholeloaners and feed the rejects to the Autobidders. No need to worry about the on-line responsiveness of the platform, or the glitches and c*ck-*ps in the marketplace, or distribution of repayments. As long as the site looked ok and worked roughly right eventually, no-one would be really bothered. If I were FC and realised that I could not run, or could not afford to run, a good-quality real-time system which keeps up with market developments, then I would start project Dinosaur, aimed at extinguising the need for manual bidders and sellers. Is anyone attending the Lenders Evening? As indicated on another Forum, new lenders drawn in by the Advertising campaign will not be having a good experience. While the cashback and high rates last I can still benefit from FC, having time to spare. My threshold for new loans is now quite high, having been spoiled by high rates and noting a near seizure in the secondary market for decently priced loans well above MBR. I put this down to the high loan volumes soaking up autobid money and cut throat competition from flippers desperate to get rid of newly acquired loans.
|
|
|
|
Post by GSV3MIaC on Nov 12, 2014 11:10:37 GMT
The Secondary Market has definitely seized up .. I guess repayments not running hasn't helped, but there is also a glut of new loans, with cash back, which has pushed SM rates way up (1% upfront is worth at least 0.4% on/off the buyer rate on the SM, for same profit level .. maybe more). With A+s selling for 11% and up (albeit only a few loans) C and C-s look pretty sick.
But you're right blender, FC are now doing ~50% of their loan business as whole loans, with minimal IT requirements (one assumes, although I guess they may have managed to find some way or organizing it which can swamp a small Cray)
PS:
5pm-ish update .. thanks to a couple of large buyers the SM looks a bit better than it did earlier .. maybe some funds have arrived in accounts?!
Even more amazing I managed to get the odd bid on on today auctions with barely a cr&pout to report.
|
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on Nov 12, 2014 12:04:33 GMT
But you're right blender, FC are now doing ~50% of their loan business as whole loans, with minimal IT requirements... Yet the website performance is still routinely ****.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Nov 12, 2014 12:13:43 GMT
I do not think that FC are incapable of running a platform to do the job well, I just do not think they can afford to maintain and develop the system within the p2p margins and with no other operation to spread the cost. And much of that cost is to do with the volume of real-time interactions with manual and bot bidders/sellers on-line, who also monitor their accounts carefully. What proportion of the business requires the high IT cost and risk?
There are two big issues looming, first the future of the property loans, which requires the manual bidders and sellers, while at the same time being mis-matched to the existing platform and screwing up the secondary market. Secondly the coming of ISAs, where I guess it will be an essential business requirement to be there early. The problem will be in yet a further system development which will provide the necessary supervised wrapper, while allowing transfers in and out to fit with the general ISA regime. A third smaller issue will be income tax deducted at source for the non-ISA component. One thing I would be considering (and FC have a good strategic awareness so these issues will not be new to them) might be to plot a course of development towards the ISA which would limit it to Autobid, perhaps an improved and more generally useful Autobid, and perhaps to limit the partial loans platform, de-facto, to more a diminishing and underwriting role. I am not sure if the large property loans can grow and thrive within the platform as we know it, and perhaps a non-organic path is being considered.
The problem for FC may be how to target the small amount of system development money which they can afford.
|
|
|
|
Post by davee39 on Nov 12, 2014 12:34:12 GMT
I would not touch any form of FC ISA.
The way the current platform works, if I do not like the options for spare cash (low rates, lack of loans), I can pull the funds out. ISA's are not geared towards funds going in and out.
When it happens, and I predict not before Jan 2016, I will stick to the relative safety of RS and Zopa for ISA cash.
I would, however, be very interested in an FC invested Investment Trust as a reasonably safe investment for a SIPP, even if, as a pensioner, I can only put in £3600 a year. FC have been good at collaborating with institutions, so something new may emerge.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Nov 12, 2014 13:33:08 GMT
But you're right blender, FC are now doing ~50% of their loan business as whole loans, with minimal IT requirements... Yet the website performance is still routinely ****. I will guess, wysiati, that your four asterisks represent an uncomplimentary word rather than an endorsement of fine quality. Perhaps you do not think much of my theory that the reason for the **** performance is that minimal effort is being made to keep the existing going while the major push is to specify, develop, test and commission a fine, reliable and future-proof replacement system? (Please leave me my dreams.)
|
|
|
|
Post by longjohn on Nov 12, 2014 14:11:56 GMT
Is anyone attending the Lenders Evening? .... Sadly it's 400 miles away so the answer is no. Glasgow or Edinburgh would be my preferred location. John
|
|
|
|
Post by GSV3MIaC on Nov 12, 2014 14:44:17 GMT
But you're right blender, FC are now doing ~50% of their loan business as whole loans, with minimal IT requirements... Yet the website performance is still routinely ****. Yep, perhaps they could float a loan to develop a working replacement .. oh wait, ReBS did that didn't they .. maybe they can sell it to FC then?! Or then there's always .. www.bbc.co.uk/news/uk-northern-ireland-30009431
|
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on Nov 12, 2014 18:16:50 GMT
Yet the website performance is still routinely ****. I will guess, wysiati, that your four asterisks represent an uncomplimentary word rather than an endorsement of fine quality. Perhaps you do not think much of my theory that the reason for the **** performance is that minimal effort is being made to keep the existing going while the major push is to specify, develop, test and commission a fine, reliable and future-proof replacement system? (Please leave me my dreams.) I believe the word is...poor. The apparent relative lack of ambition/development for partial loan markets quite possibly does reflect the move under way towards a model embracing institutional participation etc. We already get the sloppy seconds in terms of loan offerings so why not the same with IT? Hopefully there is still scope to dream that little bit longer?
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Nov 12, 2014 19:47:25 GMT
I will guess, wysiati, that your four asterisks represent an uncomplimentary word rather than an endorsement of fine quality. Perhaps you do not think much of my theory that the reason for the **** performance is that minimal effort is being made to keep the existing going while the major push is to specify, develop, test and commission a fine, reliable and future-proof replacement system? (Please leave me my dreams.) I believe the word is...poor. The apparent relative lack of ambition/development for partial loan markets quite possibly does reflect the move under way towards a model embracing institutional participation etc. We already get the sloppy seconds in terms of loan offerings so why not the same with IT? Hopefully there is still scope to dream that little bit longer? True that FC changed its mind about integrating the whole loans in the public marketplace. Your metaphor for the reject loan offerings, while being most apposite, has quite destroyed my dreams, wysiati. You wasted all your asterisks on 'poor'.
|
|
|
|
Post by thesnoop on Nov 13, 2014 12:55:28 GMT
Assuming all this come to pass Blender...
Would that mean a general lowering of fixed rates on offer in the 'new world' model...thereby increasing the value of higher rate loan parts living on from the Jurrasic era on the SM ?
If so, would loading all available moneys into the current spate of high rate 1% cashback offers not be a winning strategy ( granted a high risk one due to the creation of nasty exposure levels ).
Still, if you have deduced that the platform will be forced to evolve in that direction due to market pressure, why not capitalize on the trend?
|
|
|
|
Post by GSV3MIaC on Nov 13, 2014 13:55:36 GMT
The value of high rate parts is capped at 103% of their face value .. a one time opportunity to make 3%, while opening oneself up to 'over exposure risk' of rather more than that, doesn't seen all that great a deal. If FC head off down the fixed rate route, then the future looks great - for their competition (just like ZOPA did RS a bif favour).
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Nov 13, 2014 14:20:25 GMT
Tempting, the snoop, but best not to go too far in influencing others towards a strategy which which would be based on some drivers for change identified which may or may not result in change and, even if it happened as suggested, may not suit other lenders' circumstances.
The main point is that p2p is a new and evolving market in which many forms appear and are tested, but eventually a few survive to grow large and to gobble up the remains of the others. So the form of a business which is successful in the early growth phase may well change significantly in the larger scale mature market place. I rather see the ISA inclusion as recognition of a fairly stable and mature market form - an important strategic turning point. FC's lenders are clearly dividing into 3 types, the small furry protected ISA-mammals of Autobidders who do not really need a real-time bidding platform, the large corporate beasts of the whole-loan jungle who also do not need the platform, and the dinosaurs users of the old platform who have made FC what it is. What use now are the dinosaurs, perhaps more trouble than they are worth and very expensive to feed with IT staff?
I would suggest that the role of the dinosaurs and their expensive platform is in underwriting the business loans and purchasing a good part of the property loans. FC has always had a structural problem with its rates for business loans being dependent on size rather than risk, and one might think that fixed rates per band, maybe adjusted for security, might give more sensible rates for borrowers and reduce the need for underwriting by dinosaurs, if Autobid2 for the mammals becomes more intelligent. The property loans are clearly still on trial - and maybe this model is not one for the mature market. Therefore I see the next stage of the real-time bidding platform as focussing on using the dinosaurs for their essential role - some form of underwriting in exchange for better returns. This is clearly the practice with the property loans.
FC will make their own better-informed analysis and make their decisions. Lenders should make their decisions on what the platform actually is. Personally I am following the kind of strategy that you outline.
|
|
