The Fed released the minutes of the January FOMC meeting and provided a bullish outlook to the economy with upside risks due to tax reform. The committee indicated that they were on track to raise interest rates in the March meeting, and market participants are expecting 3 rate hikes in 2018. Higher rates would eventually need to be passed on to borrowers who have enjoyed record low interest rates for the last few years. ABS markets have been well-behaved even with recent equity volatility, although no deals have priced in the last few weeks. Here is our previous coverage of ABS markets and MPL deals issued this year.
The NY Fed report on The Role of Technology in Mortgage Lending concluded that FinTech lenders using online applications make quicker and better loans with lower default rates. Specifically, they reduce processing times by 20% and default rates by 25%. They also respond more elastically to changes in mortgage demand and streamline refinancing. The report also found that FinTech lenders aren’t particularly better at reaching underserved borrowers.
In earnings news, LendingClub announced record revenue of $156.5 Mn for 4Q2017 and a net loss of $92.1 Mn. LC stock has dropped ~18% since the announcement. The loss stemmed from LendingClub settling shareholder litigation for $125 Mn, a positive move as the company seeks to put its lawsuits behind it. Originations dropped slightly to $2.436 Bn. LendingClub indicated that rising interest rates could cause consumers to seek alternative solutions to high-interest credit card debt, which would be positive for the company. LendingClub has also increased the interest rate on most grades by 40bps, and you can monitor how coupons across various loan grades are changing using the PeerIQ platform. Reach out today!
Cross River, an established financial services company, and PeerIQ announced a strategic partnership that will streamline capital sourcing between non-bank lenders and institutional loan buyers. The new effort will combine Cross River’s capital, technology, and robust regulatory compliance processes with PeerIQ’s risk management platform, loan/borrower data sets, and data verification tools to enable community banks and other loan buyers to more easily access the sector.
PeerIQ also announced the release of Consumer Credit Suite, a fully integrated data and analytics enhancement available via the PeerIQ Analytics platform. The result of a year-long collaboration with TransUnion, this product combines TransUnion’s deep consumer credit datasets with PeerIQ’s risk analytics platform to offer its clients institutional investors and lenders a powerful tool to analyze and optimize their loan portfolios and make better investment and origination decisions.
Below is some coverage on these releases:
- Fintech-friendly Cross River Bank partners with PeerIQ on loan data (AmericanBanker, 2/16/18)
- PeerIQ and Cross River Bank Form Data Partnership (CrowdFund Insider, 2/18/18)
- PeerIQ, Cross River to streamline capital sourcing (Bankless Times, 2/20/18)
- PeerIQ, Cross River Bank Launch Loan Buying Service (Global Capital, 2/20/18)
- Cross River and PeerIQ Announce Strategic Partnership to Offer Enhanced Risk Management and Transparency Tools to Marketplace Lending (IT Business Net, 2/20/18)
- PeerIQ announces the launch of Consumer Credit Suite – a powerful combination of PeerIQ’s market leading analytics platform and TransUnion’s consumer credit data (EconoTimes, 2/23/2018)
PeerIQ at SFIG Vegas
The Credit Facility Management Suite streamlines credit facility management—for borrowers and lenders— though transparency, risk monitoring and visual reporting. Using this suite you can optimize allocation for breached covenants, optimize pledged collateral, solve for allocation across facilities and generate your borrowing base report. The tool enables covenant monitoring, simulating origination expectations and projecting collateral paydowns.
The Consumer Credit Suite offers in partnership with TransUnion, the most robust consumer credit reference data tool in the market—going back to 2000. Covering Unsecured Consumer, Auto, Student, Credit Card, Mortgage, and HELOC asset classes, the suite is essential for monitoring credit trends and performing vintage and benchmark analyses.
Do stop by our booth or reach out to schedule a meeting!
- Kevin Walsh will speak on a panel at SFIG Vegas 2018 titled, “Predictive Modeling: The Role of Big Data and Machine Learning Across the ABS Market”taking place on Monday, February 26 at 4:35 PM.
- Ashish Dole will speak on the “Marketplace Lending Snapshot: Performance, Review, ABS Issuance Outlook and Funding Trends, and Bank Partnerships”panel at SFIG Vegas 2018 on Wednesday, February 28 at 9:15 AM.
PeerIQ in the News:
- Weekly Industry Update: Equity Market Volatility, GS Dialing Up M&A (Lend Academy, 2/20/18)
- Brighter U.S. Growth Outlook Emboldens Fed on Rate-Hike Course (Bloomberg, 2/21/2018) The Fed is on track to raise rates in March and thrice in 2018.
- NY Fed finds fintech mortgages quicker, less risky than bank loans (The Hill, 2/22/2018) NY Fed opined that mortgage lenders using online applications make quicker and better loans with lower default rates, although they aren’t particularly better at reaching underserved borrowers.
- My Quarterly Marketplace Lending Results – Q4 2017 (Lend Academy, 2/22/2018) Peter Renton reports his overall return on MPL loans at 5.01%, with a 2.77% return in 2017, down from double-digits as the portfolio seasons.
- Blankfein Says Marcus Will ‘Move the Needle’ in Coming Years (Bloomberg, 2/13/2018) Blankfein believes that Marcus, a multi-product business, will contribute to raising firm ROE. See our past analysis on Marcus acquisitions here.
- Goldman Sachs and rivals home in on risky consumer banking (FT, 2/16/2018) Banks are looking to consumer lending to keep up loan growth and regain market share. See our past analysis on bank and fintech M&A here.
- Here’s another way Amazon and banks are collaborating (American Banker, 2/21/2018) Amazon is partnering with Suntrust and Ally to develop smart debit cards targeted kids, teens and college students, in another example of Silicon Valley collaborating with Wall Street.
- LendingClub Reports Fourth Quarter and Full Year 2017 Results (LC, 2/20/2018) LC reported record revenues, but a net loss as it settled shareholder lawsuits.
- PayPal to Offer Business-Loan Bonds (AB Alert, 2/23/2018) Paypal is looking to securitize $500 Mn SB loans in its Working Capital program which would broaden its funding base.
- Silicon Valley Explores a New Investment: Your Home (WSJ, 2/18/2017) New loan products like shared-equity are expanding mortgage offerings to borrowers unable to access traditional products.
- Better Mortgage Hits $1 Billion Dollars in Mortgage Loans Funded after Launch in January 2016 (BusinessWire, 2/16/2018) Better Mortgage, a digital mortgage company, has originated $1 Bn in mortgages since its launch.
- Add Another Bank to Fintech Roostify’s Roster of Investors (Bank Innovation, 2/16/2018) Santander has invested in Roostify, a startup that digitizes mortgage applications, as the trend between bank and fintech partnerships continues.
- BlackRock bulks up research into artificial intelligence (FT, 2/19/2018) BlackRock is using AI in the asset management process to generate higher returns by analyzing varied and non-traditional datasets.
- In One Tweet, Kylie Jenner Wiped Out $1.3 Billion of Snap’s Market Value (Bloomberg, 2/22/18) Kylie Jenner’s tweet that she doesn’t use Snapchat anymore sent the stock down 7%.