the peer-to-peer landscape - cuna councils€¦ · the peer-to-peer landscape presented by:...
TRANSCRIPT
The Peer-to-Peer LandscapePresented by:
SimplyCredit Inc
Karthik Sethuraman, CEO Alan Bahr SVP, Business Development
September 15, 2016
Agenda
Peer-to-Peer (P2P) Lending Defined
Performance of Key P2P Platforms
Signs of Disruption
Recent Developments
Strategies for Credit Unions
Q&A
2
Peer-to-Peer (P2P) Lending Defined
3
A Short QuizPeer-to-peer (P2P) platforms crowdsource funds primarily from individuals who have cash and
lend to individuals who need cash
True
FalseWhich of the following is NOT a characteristic of P2P platforms?
A. Online Loan Origination
B. Capacity to Portfolio Loans
C. Automated UnderwritingD. Loan Servicing
4
FALSE
B
The Term Peer-to-Peer is a Misnomer
5
80% - 90%
10% - 20%
Source: PwC, Feb 2015
P2P Shareholders and Investors
Institutional investors are banks, hedge funds, or other business entities… Approximately 40 different funds have committed to purchase assets from P2P platforms, with at least 12 different funds committing $200 million or more
PwC, Feb 2015
Board members at the largest P2P platforms include executives at some of the largest banks in the world including Morgan Stanley and Citigroup... WellsFargo, through its venture capital arm, is the largest investor in LendingClub
Forbes, Oct 2014
6
Summary: What is P2P Lending?Increasingly referred to as Marketplace Lending
Borrower transactions are consummated online, leading to lowered transactional costs
Institutional investors dictate underwriting requirements
Most loans are unsecured, but platforms are expanding into other lending types
The P2P platform generally services the loan
There is no common bond between borrowers and investors—P2P platforms intermediate cash flows
7
Performance of Key P2P Platforms
8
A Short Quiz
P2P lending is growing, but it’s still a niche business
True
FalseP2P platforms encroach on credit union core businesses
TrueFalse
P2P platforms are only interested in low credit-quality tiers
TrueFalse
9
FALSE
TRUE
FALSE
P2P Volume Outpaces Other Lenders
10
Top P2P Lenders Worldwide
11
P2P Touches on Many Borrowing Needs
12
P2P Fills the Entire Credit Spectrum
13
Similar Platforms—Different Strategies
14
Type
of L
endi
ngBusiness
Student
SecuredConsumer
UnsecuredConsumer
Investor Warehouse Deposits Lending Partners
Liquidity Source
SimplyCreditGoldman
Sachs
SoFi
Common Bond
Prosper
OnDeck
Kabbage
LendKey
Lending-Club
LendingHome
Avant
LendStreet
Signs of Disruption
15
FinTech Versus Bundled Services
16
P2P Strategies Revolve Around:Use of an Online / Mobile
PlatformEmploys Sophisticated AnalyticsTarget MarketingProprietary U/W and Pricing
ModelsDisseminates Superior ContentConsumer EducationElectronic Delivery
Focuses on User ExperienceSimplified Application ProcessManagement Tools and Reporting
17
OnlinePlatform
and Social Media
Analytics
Focus on User
Experience
SuperiorContent
Do You Hear These Warnings?
18
Someone else seems to know what I need, when I need it.
Hmmm…I can get all kinds of financial services and support online today.
Why can’t I get the information from you?
But I might have to go elsewhere for my other services.
I received a great loan offer through email. Can you match it?Can’t I just apply and get what I need online?
There’s a great website where I get all the financial information I need.
Don’t worry, I’ll keep my checking account with you.
What is happening with your average products per member metric?
Recent Developments
19
The Market Leader is Ailing
20
What Caused Originations to Fall?
21Source: LendingClub, Aug, 2016
A Short Quiz
Which of the following is the primary reason for LendingClub’s decrease in originations?
A. Falling consumer demandB. An increase in targeted credit quality
C. A computer glitchD. A drop in investor demand
22
No, apps doubledNo, quality was stableNo, systems were fine
Fewer Apps are Being Approved
23Source: LendingClub, Aug, 2016
Implication of Wall Street Reliance
P2P platforms are heavily reliant on Wall Street liquidityWhen their liquidity diminishes, P2P platforms suffer
The platforms offer terms approved by hedge funds and other institutional investors
For the benefit of investors, loans are pooled and packaged into notes, similar to mortgage pass-through securities
P2P platforms do not introduce borrowers to their investor partners
For credit unions, traditional P2P platforms pose a difficult collaboration problem:Loan growth?Direct member interaction?
24
Strategies for Credit Unions
25
Credit Union Strategies
26
Questions and Answers
27
