Thought you might be interested to know we've made our 500th loan.
I appreciate it isn't quite in the league of the "big 3", from where I came, but it's a milestone nonetheless. And we are very thankful to all our early adopter lenders that have helped us. We know our platform has more risk than others, not least in that we have no provision fund or fractionalisation of loans. Thank you to the lenders that enjoy the "roller coaster of P2P". Although i prefer to think of it as the purest form of P2P, with direct one-2-one matching. Remember, 100% of capital is at risk of loss.
Also, I'd like to share with you this chart of our loan portfolio, just because it's cool but also because it shows how diversified our borrowers are. That's the power of the Internet!
P.S. For the record, Bristol City fans (based on geography) are very good borrower customers!
And another update in the same theme, The Money Platform has not made over 1,000 loans (it took us 5 months from the 500th);
In fact, we've now written 1,084 loans to 777 postcodes (that's customers repeating, and telling their friends).
As the platform develops and improves the acceptance policy, and rolls out new sources, lending volumes are now speeding up considerably. Some early adopters at the start did complain that their returns were diminished by slow lending, this is less of an issue now. I don't think it'll take 6-months to get to loan 2,000.....
And how do you communicate that bad news to lenders ?
Do you update lenders on progress made chasing these ?
The lender's web site has a statistics page for the portfolio as a whole, which right now looks like;
However this is of course rear view mirror reporting, and there is no guarantee the future will be similar. In fact We have made so many changes we expect future bad debt to be lower. This reporting is also showing "lates", whoich is a very common feature in higher risk lending. You only really know the final scenario after the full collections and arrangement process.
The statistics are moving fast, for a number of reasons. We continuous change the credit policy based on our own data rather than generic lending policy (e.g. 3-month loans acceptance high APR will be dramatically different to 5-year low APR via a comparison site traffic). It's not only different score breaks, but the data used and customer journey is very different. As an example, we've now been able to build and implement a bespoke Money Platform scorecard specific to our business. This went live late summer 2017 and so the benefits should start to be seen shortly.
However the biggest change was the move to amortising loans in late September 2017. Prior to this the loan product was a single payment "bullet loan", which for a higher risk short term borrower was a big ask, i.e. to pay back the capital and interest in one go three months down the track. This product was unique in the UK for a reason, and so since September customers make multiple payments. This de-risks the product hugely not only in that it makes affordability easier but partial payments reduce bad debt and gives us an early indicator of potential problems.
I have 15% late and absolutely no communication from TMP. (Also a couple of defaults from before the statistics started, no communication about these either).
All borrowers are communicated prior to loan repayments, and if there is a late payment has a number of automated and manual actions taken in all instances;
> Human telephone call within the first 5 days to discuss potential solutions, which can include full/partial payment or more commonly an arrangement to pay over time > Automated emails > Automated text messages > Repeat CPA payments attempted > Letters, in certain curcumstances > Human interaction via social media
The detail of communications and especially human interaction is not an easy thing to provide to lenders, and probably wouldn't give any reassurance. Notes are taken, but are probably not appropriate for public consumption, even by the lender as they can be very specific about the borrowers financial circumstance.
So bearing in mind the volume of loans and the small value nature, it isn't practical or useful to provide detailed running commentaries. At the moment we limit communication to the financial status of the loan and balance. It isn't efficient to provide lenders with unique individualised commentary for every £250 loan written.
It's also worth noting that we try to do the right thing by the borrower compared to other short term lenders. For example this includes freezing the subsequent interest to 0%, limit any further charges and never roll-over loans into another term.
If lenders have any ideas as to what data they would find useful, we will make the change. But this must be automated and not simply access to the details human notes made on the loan.
As a lender I appreciate it's not practical to email the lender each time something happens or to give anything that might be personal details of the borrower. However given that it's 1 to 1 lending it's not as though 500 lenders have to be written to to say you have 50p in an overdue loan etc
I would have thought there could be automated emails at the following stages
When a payment is overdue by more than 5 days - basically acknowledging the lateness; saying the borrower has been spoken to and either a payment plan has been agreed OR that the following strategy will be followed ( basically as per Kevins post)
When a payment is , say 30 or 60 days, perhaps both, overdue a further email, probably not saying much more effectively than we're still chasing the borrower and following the process
When the loan is marked as defaulted a final email noting this - I'm assuming that once marked as defaulted no further active attempts are made to recover.
Yes I'd know they were standardised emails but at least it would make me feel the platform was still chasing things.
Of the 3 loans that I have status defaulted or overdue by more than 30 days I've had no communication from TMP as to what was happening though I did get a reply when I emailed them.