What's on the aftermarket?

IMHO you are ignoring the rule of KISS. My guess and it is only a guess is that the average lender on most of the P2P sites are not sophisticated investors. Most I think you will find are your average Jo or Jill who has or had a few grand stuck in a building society/ bank account and are/were getting annual interest of .5% before tax. They were not at all happy with this and when they came across P2P through the press and TV they thought they would give it a whorl. Previously when investing or withdrawing money from their building society they only had to worry about remembering their password and pin numbers and everything else was done for them. Now in Assetz you are taking the complexity of investing to a far higher level which although it may not be beyond the understanding of the majority will almost certainly put off many potential investors. Yes you will always attract a few investors who have time on their hands and like playing with their money but they are and are likely to remain the minority.

There is another psychological aspect of this and that has already been hinted at by several posters on here which is having "one over" other investors through using AI. Even if this is not true that has to be a huge disincentive to the many to invest in your product. In investing a level playing field has to be a must.

I have already made these points to Andrew but I get the feeling he does not see things my way. For a while I will watch developments from the side lines.

PS. I do happen to know quite a bit about issues like this one. Twenty some years ago I used to be involved in running short course programmes at Cranfield University and one of the most popular with board level directors of the FTSE 250 was entitled "From Technology Push to Organisational Pull" and at the core of this was KISS.

Hi Merlin,

I, and I know Andrew agrees, do welcome the feedback and whilst being in danger of sounding like I'm brushing your concerns aside there is a bigger picture that these developments fit in to.  Auto-Invest is just a dumb tool that is intended to make it easier to invest, and from certain points of view it should make the whole process easier.  Instead of having to understand the various mechanisms used behind the scenes you can type a number in to a given loan and have the system manage all of that for you.  In theory that should be easier for someone totally new to P2P lending who isn't already familiar with bidding and auctions and autobid tools on other platforms.

But this is just step one in a wider series of changes all of which have been very carefully considered and debated internally, which fit our perception of how the marketplace will evolve over the coming months and years.  Tools are being worked on that will provide a layer of sophistication over and above the current 'dumb' auto-invest tool that will appeal to advanced users.  An API is also planned which will appeal to those who want that level of programatic control.

But on top of all of that there will also be a huge simplification in the loan and bidding process for all that will be targeted at a far wider audience.

Auto-invest doesn't give any advantage to investors over those who don't use it except on the aftermarket on loans where supply is limited.  This isn't because it is coded to give an advantage but simply because it exists and can operate faster than a human can.  Other than making it not exist or building in an artificial delay which would make it an ineffective solution, I do not see any way around this.

The other problem is defining what a level playing field is.  Some investors have time on their hand and can carefully watch the aftermarket.  Others do not and will find it impossible to invest in certain loans unless they get incredibly lucky.  In many ways AI levels that playing field by watching the marketplace for all regardless of how much time can give to watching the site.

This is an important debate to be had though and I do welcome your feedback and that of our other lenders.  Please do bear with us as our grand vision is unveiled in a series of steps over the next 60 - 90 days.  Hopefully it'll all make sense to everyone in the end, even though I know we cannot satisfy everyone.

Chris

Merlin, I'm with you on KISS and initially this AI does seem to be complex. It will suit the investors it's aimed at, but not those used to opening a building- society account for their savings. The question is should unsophisticated investors be getting involved in p2p?

Perhaps.  But these investors don't have to use it.  They sign up, spread their investment over however many opportunities are available at the time -- either scheduled or live auctions, or loans that have been drawn down where underwriters have parts for sale -- and they're done.  That looks simple enough to me.

The category of opportunities that they'd miss out on are the auctions that have closed but aren't drawn down yet, and which have been underwritten.  For those, the investors would have to either check back later to see if the underwriter parts had appeared on the AM, or use AI to set up to automatically buy parts in those loans when they do become available.

I wonder whether AI will gain enough options that in future an investors will be able to instruct it that when parts of Loan X come onto the AM AI should sell parts of Loan Y to raise the funds needed to invest in Loan X?  (Because of timing issues, that would work only for loans with underwriting reaching drawdown when large numbers of those parts appear on the AM.)

The question you pose is a very fair one and I guess that it was this, amongst other things, that caused the FCA to take an interest in P2P. There cannot be much doubt that a large number of the lenders on FC are drawn from the ranks of disgruntled Building Society investors so it is logical to expect it to be similar for AC.

Regarding the implementation of AI, I am concerned about the number of tweaks and twists that have already had to take place on this module that suggest to me that it has been implemented on the fly and not fully thought through before it was launched. Another factor is the lack of documentation as has been pointed out by another person on this thread. Not having full information of the main site completely defies my understanding. What worries me even more is that if they are about to add further layers of complexity as Chris suggests where will this take us?

We're working towards looking after that end of the market, and AI is a step along that path, but we can't make the site that simple without removing all the control and options already available or building automation tools on top of them.  If we removed the details of all the loans and just put a "deposit a sum of money" box on the site then we'd lose our existing lender base.