By Ryan Weeks on Monday 12 June 2017
AltFi has a secret weapon: our sister company AltFi Data’s analytics tool. It is fuelled by cash-flow data from some of the world’s biggest and best-known marketplace lenders, including “the big three” in the UK, Prosper in the US, and Lendix in France. The tool has just been updated so that the UK-based firms' performance can be scrutinised up until the end of May. For Prosper, the data runs up to the end of April.
(N.B. The Lendix update will happen soon, and we’ll run a follow-up article on the data when it lands.)
The analytics tool allows curious journalists such as myself to bore into the performance of these platforms in a way that has never before been possible – comparing track record across borders on a like-for-like basis.
So what does the latest update to the numbers tell us?
Prosper is currently lending significantly more than it is being repaid for the first time in roughly a year.
The struggles of US marketplace lenders in 2016 is well documented. The sector was rocked by scandal when Renaud Laplanche was ousted from Lending Club mid-way through the year. But investor demand had been dropping off months before this, and the big platforms were forced to lay off hundreds of employees and scale back their marketing efforts in response.
In March, the platform posted its first positive monthly net lending figure ($200k) since May of last year. April saw net lending growth to c. $15m.
Meanwhile, the average gross interest rate of its loans continues to rise, after a significant jump in December of last year. There can be little doubt that this trend is driving both enhanced investor demand and new origination opportunities.
Two of the UK’s “big three” peer-to-peer lenders – Zopa and Funding Circle – have lent more than £2bn to date, and are fast careering towards £2.5bn. RateSetter is nearing the £2bn milestone and will likely cross the line in the next month or two.
But what’s interesting is that all three of these lenders were charting a similar course in terms of origination until approximately September of last year. From that point on, we’ve seen a splitting out of their origination lines, with Funding Circle soaring, Zopa more or less keeping to its trajectory, and RateSetter tailing off.
RateSetter has posted back-to-back months of negative net lending in April and May (roughly £-700k and £-4m respectively). There are no other negative net lending months in the platform’s 6-7 year history.
The context here is surely that RateSetter has been forced to adjust its business model as part of its ongoing efforts to get authorised. Most significantly, the firm has had to wind down its wholesale lending activities (loans to other lending businesses).
Look out for our follow-up analysis on French business lender Lendix, coming soon.