1) efficient and secure platforms where they can transact,
2) the ability to diversify and monitor their portfolios within and across platforms
3) access to relevant and complete data.
The data point is especially important. The availability and quality of data drives platforms' abilities to underwrite and service borrowers, and investors' abilities to assess and take on risk.
Stepping back, banks' current "flight to quality" is in many ways a flight from complexity. Certainly in the SME market, the businesses most squeezed are either too small or too niche for banks to dedicate the time or cost to underwrite. As banks retrench, this "low hanging fruit" is the first to fall, losing out on renewals, refinancing, or new finance at all. There are droves of private investors, however, willing to do the work and name a price. With enough data, risk can be assessed and investors can demand a fair, risk-adjusted return.
At MarketInvoice we fully understand the importance of facilitating data transparency, for our investors and for ourselves. With an average trade duration of less than 40 days from launch to settlement, we are uniquely able to collect lots of data, learn quickly and evolve. In April we launched the fourth iteration of our risk-based pricing model, which incorporates nearly 100 data points to categorize companies into one of ten risk-based price grades. In the latest iteration of the model, we expanded our universe of eligible invoices to now include invoices issued to companies with less than £15 million turnover (previously, we would only trade invoices issued to "blue chip" customers). Of course, it's the data that we have collected over four years and over 6,000 settled transactions that allowed us to expand our serviceable universe. And for investors, the more data we can pass on, the better they can assess risk and the more capital they can provide to their peers on the other side.
The MarketInvoice loanbook can now be found on the AltFi Data website here. AltFi Data has also had a dig around the data. The analysis article can be viewed here.
