AltFi Data Analytics launches today, bringing a set of institution grade analytical tools to the UK’s marketplace lending sector.
The new subscriber-only service is powered by loan-by-loan, cash-flow level data from Funding Circle, Zopa, RateSetter and MarketInvoice, together making up 70% of UK marketplace lending. AltFi Data is pitching the product as a means to effectively make use of the impressive level of disclosure exhibited by these platforms. The tools will allow users to explore, visualise and download the various data sets. The bait that’s been dangled by the analytics company is: “How is the marketplace sector generating 6%+ net returns for investors?”
The customisable tool is powered by AltFi Data’s proprietary calculation engine, providing an impressive level of granularity on over half a million loans incorporating over half a billion data points. Users will be able to hone in on lending volumes, aggregate gross lending rates, arrears, bad debts, net returns and term. Users can also perform analysis by cohort, by security and by risk band. The images below demonstrate the sorts of analyses that can be performed using the tool.
Figure 1: Aggregate Gross Lending Rate 2011-2015
Figure 2: Aggregate Bad debt by Annual Lending Cohort 2011-2015
Figure 3: Aggregate Net Investor Returns 2011-2015
AltFi Data Analytics will allow for investors and industry observers to keep closer tabs on the performance of the underlying assets that make up the marketplace lending asset class. In light of the present turmoil in the online lending space Stateside, such a tool becomes all the more relevant. Online lenders in the US have suffered from a cooling of investor demand in recent months – one that appears to have been driven by uncertainty over what remains a fairly nascent industry. There’s uncertainty over the economy, over rate hikes and over tumbling share prices – but there isn’t an obvious problem with the loans themselves; a US equivalent of the AltFi Data Analytics tool would help to demonstrate that. Perhaps this will come to be viewed as another key distinguisher for the UK’s marketplace lending space.
The endorsement of the product by the four largest UK platforms is implicit, given that it's their data that powers the tool, however each of the platform heads have now gone on record in order to voice their support.
"It's easy to talk about transparency but the key differentiator is how simple this information is to digest and understand. Platforms have a responsibility to ensure that data is accessible, but it's also fantastic to have the support of AltFi Data in this area. They continue to push the boundaries with the information they provide to investors and analysts."
“We think it is important for investors to have transparency of loan book data, so that they can make informed decisions when it comes to investing. To date AltFi Data has done a good job of collating, analysing and presenting the platforms’ loan books making it easier to understand a platforms’ performance.”
"An emphasis on hard data and added scrutiny is vital in creating a sustainable, trusted peer-to-peer sector. Not all marketplace lenders are the same, and different platforms operate in different asset classes. By taking cash flow data and analysing loan books, AltFi Data is helping to establish independent, third-party standardisation within the sector. It's important that each platform is seen in its correct context, and the differences between them are clearly illustrated for investors and borrowers."
“The UK’s marketplace lending sector is setting new standards for transparency in finance. For many years investors have been unable to access clear data on returns from personal and business loans, and it’s great that AltFi Data are a force for positive change in this area. AltFi Data Analytics will widen access to platforms’ data and make it easier to analyse than ever before.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.