Post by WestonKevTMP on Sept 21, 2018 15:51:35 GMT
Comrades,
Late and default performance has always been our primary aim to minimise, as if these are to high then lenders will lose faith and not use our platform. As a pure P2P platform this is clearly integral. The other important aligning point is that the platform only takes payment when a loan is repaid, so a default doesn't help The Money Platform. This is very different to many other platforms that take a payment when the loan is issued.
However we do not use a Provision Fund. As a result losses are not averaged across all lenders, who must invest a minimum of £250 to lend a single whole loan. Inevitably, statistically there will always by a marginal but "unlucky" segment of our lenders that see more bad debt than income. Whilst many lenders will be enjoying enhanced returns above expectations. This is not only unfortunate, but a bi-product of the platforms design with no fund or pooled nature of lending. We do hope to change this in the future, but this is a significant regulatory and technical change. Currently, a lenders only protection is diversification.
That said, we've made a number of changes in the last 6-months that has had a significant improvement bad debt performance. We have more competition in the market now so I have to be limited with what I say, but the changes includes;
1) A more robust statistical use of scorecards (including our internally derived version) based on loans written by The Money Platform rather than industry figures
2) Reduced acceptance rates, declining a number of segments based on customer "intent" rather than just the credit performance data from the credit bureaux. Bad debt performance mirrors acceptance rates, but fixed and variable costs (e.g bureaux) increase with applications that have to be paid even for declines - so this is a constant battle.
3) Dual bureaux decisioning, in that we've in creased the data obtained from our second bureau (CallCredit, alongside the primary Equifax)
4) Collections processes, have been significantly improved with a far larger in-house window of activity. This is also using two new technological methods that have improved monies received (I can't go into detail here for competitive reasons)
Hopefully some our existing lenders will already have seen the impact of the above changes, with more payments received
Shortly we will be announcing some financial news that provides the platform with more sustainability, alongside an increased team. Also personally I've had a lot of experience in the Open Banking world, and I expect to use this new regulation and technical ability to good use for The Money Platform - but the timescales on PSD2 effectiveness take us into 2019.
Kevin.
Late and default performance has always been our primary aim to minimise, as if these are to high then lenders will lose faith and not use our platform. As a pure P2P platform this is clearly integral. The other important aligning point is that the platform only takes payment when a loan is repaid, so a default doesn't help The Money Platform. This is very different to many other platforms that take a payment when the loan is issued.
However we do not use a Provision Fund. As a result losses are not averaged across all lenders, who must invest a minimum of £250 to lend a single whole loan. Inevitably, statistically there will always by a marginal but "unlucky" segment of our lenders that see more bad debt than income. Whilst many lenders will be enjoying enhanced returns above expectations. This is not only unfortunate, but a bi-product of the platforms design with no fund or pooled nature of lending. We do hope to change this in the future, but this is a significant regulatory and technical change. Currently, a lenders only protection is diversification.
That said, we've made a number of changes in the last 6-months that has had a significant improvement bad debt performance. We have more competition in the market now so I have to be limited with what I say, but the changes includes;
1) A more robust statistical use of scorecards (including our internally derived version) based on loans written by The Money Platform rather than industry figures
2) Reduced acceptance rates, declining a number of segments based on customer "intent" rather than just the credit performance data from the credit bureaux. Bad debt performance mirrors acceptance rates, but fixed and variable costs (e.g bureaux) increase with applications that have to be paid even for declines - so this is a constant battle.
3) Dual bureaux decisioning, in that we've in creased the data obtained from our second bureau (CallCredit, alongside the primary Equifax)
4) Collections processes, have been significantly improved with a far larger in-house window of activity. This is also using two new technological methods that have improved monies received (I can't go into detail here for competitive reasons)
Hopefully some our existing lenders will already have seen the impact of the above changes, with more payments received
Shortly we will be announcing some financial news that provides the platform with more sustainability, alongside an increased team. Also personally I've had a lot of experience in the Open Banking world, and I expect to use this new regulation and technical ability to good use for The Money Platform - but the timescales on PSD2 effectiveness take us into 2019.
Kevin.