Prosper is tweaking its retail investor experience in an effort to boost investment flows.
Prosper Marketplace is enhancing its investment proposition for individual investors with the launch of a new set of retail-friendly tools. These include an Auto Invest functionality, which will allow users to defer allocation to the platform with as little as $25 per note. Investors will now have access to Portfolio Customization, allowing them to set their own risk/return parameters. They will also have the benefit of an Account Dashboard, which provides a basic overview of portfolio performance. The visual experience on the site has also changed, with an emphasis on easy-to-use navigation. The intention is to allow individual investors to explore the platform in greater depth, perusing payment information, interest rates, principal and so on.
The backdrop to these changes, of course, is a recent drying up of institutional investor demand across the marketplace lending sector. Nowhere has that aridity been more pronounced than in the US. Citi Group stopped purchasing Prosper loans earlier this year. The platform has since been forced to cut jobs and to scale back on a number of borrower marketing channels (according to the Wall Street Journal). Prosper raised its rates for the second time this year in May in an effort to bring institutional partners back to the table. The ploy paid off, with Blue Elephant committing to resume purchases of Prosper loans just days later. The platform also published performance data in early June, stating that its core product remains “very attractive”.
Retail money has been something of a missing piece in the US marketplace lending jigsaw. Lending Club, Prosper and SoFi have rocketed to scale over the past few years, buoyed by fervent institutional demand. There have been approximately 40 securitisations within the US online lending sector. There has been just 1 within Europe – Funding Circle’s recent SBOLT 2016-1.
But Prosper is not the only platform with designs on rediscovering its retail roots. Lending Club recently attempted to sweeten the deal for its retail investors by tightening its integration with LendingRobot – an auto-investment platform for individual investors. This move again came in the wake of a decision by the platform to scale back on borrower marketing activities.
Prosper ran a survey on its investors in May which revealed that over 80% of them had enjoyed returns that had met or exceeded their expectations. However, Aaron Vermut, chief executive officer of Prosper Marketplace, concedes that the investment process needs streamlining. He sees today’s changes as a crucial next-step in the evolution of the platform: “Marketplace lending is quickly establishing itself as an asset class that should be part of everyone’s fixed-income portfolio, the way stocks and bonds are today. However, in order for retail investors to start investing through the Prosper platform, we needed to improve the experience and make it easier. Today, we’re excited to deliver a better, more accessible experience that gives our investors more choice, convenience and customization.”
Join AltFi for its third annual Alternative Income Forum, exploring closed-ended funds (investment trusts) specialising in generating an income using alternative assets such as specialist finance, P2P lending, direct lending, asset leasing and more. Hear from the leading investors and fund managers in this rapidly growing market.