We first want to extend a hearty congratulation to Peter, Jason, and all the organizers at LendIt; the conference was excellent, with an incredible list of attendees—the size and scale of the event really captured the growth in the sector. We look forward to next year’s event.
So many themes coming out of the conference, though the unifying message we heard was the increasing funding challenges faced by marketplace lenders to meet their growth. There is still much demand for the paper, but online lenders are competing with other credit spread products to lure hedge funds and asset managers that fueled the first stage of institutional growth. Dan Ciporin gave a great talk on the push to access new retail sources (e.g. wealth managers, RIAs, brokerages). Ram’s securitization talk was standing room only, as securitized paper is needed to access new funding sources that require rated ABS. Platforms are increasingly courting community bank relationships, looking to access the longer tail of banks well positioned to hold whole loans. And as noted below, Morgan Stanley and Prosper are developing new CUSIP certificates to access pensions, insurance companies, and other buyers.
These developments are, of course, not surprising. Our tools are designed to make it easier for platforms to describe their risk to existing and new funding sources, as well as enabling institutional investors more comfort in understanding and pricing that risk.
Conferences:
- For LendIt coverage you may have missed, visit the LendIt site to access the video recordings.
- PeerIQ will be participating on a panel at the AltLend Summit 2016 in New York on July 13-14.
Industry Update:
- First European Marketplace Lending Securitisation Achieves Aa3 Rating (AltFi News, 4/14/16) Deutsche Bank will arrange the MPL securitization of loans originated by Funding Circle.
- Marketplace-Loan Plan Marks Funding Shift (AB Alert, 4/15/16) Banks and originators explore CUSIPS as a way to draw new capital into the market.
- Kabbage Preps Small-Business Deal (AB Alert, 4/15/16) Kabbage is working with Barclays on an ABS deal expected to hit the market by late June.
- Marketplace Lending: Will Funding Limit Growth? (Morgan Stanley, 4/15/16) Key takeaways from LendIt 2016.
- Chase Quietly Launches Its Online Small-Business Loan Platform (American Banker, 4/12/16) JP Morgan Chase partners with OnDeck to launch digital lending platform to its existing small-business customers.
- 2016 Survey Marketplace Lending (Richards Kibbe & Orbe LLP & Wharton Fintech, 4/16) Concerns among observers about the slower rate of growth are not shared by actual investors.
- Breaking New Ground: The Americas Alternative Finance Benchmarking Report(Cambridge Center for Alternative Finance, 4/16) Volume of online alternative finance increased by 212%, to over $36bn in 2015.
- Survey of Online Consumer and Small Business Financing Companies (California Dept. of Business Oversight, 4/8/16) Thirteen of online lending’s largest firms made $15.91bn in U.S. loans in 2014, up 700% from 2010.
PeerIQ Mentions:
- Funding Circle to launch marketplace lending ABS in Europe (Euromoney, 4/14/16) SBOLT 2016-1 marks debut European market place securitization of UK SME assets originated by Funding Circle.
- Citigroup Said to Stop Securitizing Prosper’s Online Loans (Bloomberg, 4/12/16) Citigroup will no longer buy debt from Prosper, talks of Goldman Sachs potentially replacing Citigroup.
Lighter Fare:
- PeerIQ software engineer, Brendon Villalobos, impresses judges on America’s Greatest Makers. Looking forward to episode 3 this Tuesday!