4 Small Business Advocates
Investors aren’t the only stakeholders raising concerns with marketplace lending. Many US regulators appear to be indicating that increased supervision is on the way, as described below in the Recent Highlights. Regulators have echoed similar themes around transparency for investors,台北汽車借款, and have also highlighted the need for improved borrower protection and risk management.3 P2P securitisation market hit with high margins,票貼, low liquidity. News Bits – Banking Day. 6 June 2016. Accessed 23 June 2016.
2 Marketplace Lending’s Big Investors Grow Anxious. 26 February 2016. Accessed 13 July 2016.
Over the past few years, marketplace lending has often been headline news for its rapid growth and innovation. But a rapid series of regulatory and market developments have shifted the tone of coverage in recent months – from exuberance to tempered realism. Some marketplace lending platforms (“marketplace lenders”)1 have had earnings come in below expectations,微整型, while others have experienced declines in loan origination volume for the first time, indicating an apparent slowdown in growth across the sector. However,嘉義借錢, these tough conditions will drive marketplace lenders to find new ways to differentiate themselves in the eyes of investors, leading to “growth” of a different kind. Marketplace lenders will need to quickly come of age and increase their maturity in areas such as risk management and compliance.
1 For the purposes of this document, ‘marketplace lender’ is used broadly to describe non-bank institutions which offer online lending to consumers and small businesses. This includes both lenders which fund loans onto their own balance sheet as well as marketplace platforms which connect borrowers with investors, regardless of whether the institution is the true lender.
The fact that risk management and compliance are critical to building a sustainable business model isn’t a new concept for marketplace lenders. From early Securities and Exchange Commission (SEC) scrutiny on the investor side to last year’s launch of the ‘Small Business Borrowers Bill of Rights’ by multiple lenders4,高雄貸款, the sector has long recognized the importance of protections for both investors and borrowers. Marketplace lenders find themselves needing to demonstrate not only that they are ready for increased regulatory oversight, but also that their business model will remain viable in any credit environment. While some critics are beginning to doubt the survival of the marketplace lending model, we view the recent events as opportunities to strengthen the foundation of the industry for long term growth and a natural part of the industry maturation process.
Slowing origination volumes haven’t been the only signs of stress in the market. Marketplace lenders have simultaneously had to face a number of headwinds, including concerns regarding the transparency and reliability of loan-level data and rising delinquencies. In recent months, Asset-Backed Security (ABS) activity slowed and some institutional investors exited the market.2 Average credit spreads on senior marketplace lending ABS widened 76% between October 2015 and June 2016, and liquidity in the market decreased significantly.3 As a result, many marketplace lenders have been forced to re-evaluate their funding sources and consider less-attractive terms in order to secure the capital they need to continue funding loans. While there have been some more positive signs recently in the ABS market, these shifts highlight the sector’s heavy dependence on investor sentiment.
4 Small Business Advocates, Lenders & Online Credit Marketplaces Unveil Small Business Borrowers’ Bill of Rights. PR Newswire US. 6 Aug 2015. Accessed 6 June 2016.
Investors are not only demanding improved terms – they also expect increased transparency and access to loan-level data and documentation. Based on PwC’s analysis, there is currently considerable variability in practice across marketplace lenders not only in terms of the level of granularity of loan and collateral data provided, but also with regards to the definitions of individual data elements. This includes variability in fundamental data elements such as what constitutes a charge-off. Similarly,聚焦超聲波拉皮, variability in transaction structures for securitizations and the lack of standard representations and warranties make it difficult for investors to fully evaluate the risks associated with each deal.
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