AltFi Global Summit 2016
WELCOME TO OUR 2016 GLOBAL SUMMIT REVIEW
Firstly, an enormous thank you to all those who attended and supported the AltFi Global Summit 2016.
The AltFi Global Summit 2016 was the first event to rigorously explore the positioning of the marketplace/online lending asset class within the broader alternative credit spectrum. The event also challenged key industry participants on the trials of 2016, and galvanised discussion around the emergent marketplace lending "ecosystem".
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Standard Sponsors
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Agenda
Day 1 - 14 Sep 2016
09:00am - 09:30am
SESSION
Opening Keynote
09:30am - 10:00am
SESSION
Where are the boundaries? How do investors define alternative?
A recent report by Deloitte and the Alternative Investment Management Association called the $560bn alternative credit market a quiet revolution in the way that companies secure funding. The report surveyed managers with $170bn in funds allocated to private credit strategies. Tellingly, there was no mention whatsoever of online lending platforms. But should there have been? How do online lenders fit within the broader alternative credit spectrum?
Do equity investors care about this point? Given the recent travails of the industry, is the fintech/alternative finance/online lending tag still as hotly sought after by major VCs?
How important is the positioning of the online lending asset class for investors? Could this be a key factor in bringing larger, fixed income investors to the party?
And if such investors are to start ramping up their investments in the online lending space, which will be the primary method of access? Direct to platform? Via a fund? Through some manner of specialist access platform?
What other requirements will have to be satisfied in order to bring this class of investor into the sector? Are standards of disclosure, internal monitoring standards, etc. up to scratch?
SPEAKERS
10:00am - 10:30am
SESSION
Transforming platform disclosure into practicable transparency
SPEAKERS
10:30am - 11:00am
SESSION
Coffee & Networking
SPEAKERS
11:00am - 11:30am
SESSION
In defense of online lending
2016 has been a tumultuous year for the online lending industry, with external sentiment towards the sector drastically shifting. In light of these developments, our panel of leading sector representatives will argue the case that the future of the industry remains bright.
The sustainability of the marketplace model will be a key talking point. With many of the world's largest marketplace lenders recently having resorted to using their own balance sheets to fund loans, is the idea of a pure marketplace model still feasible? If it's not, what's the right balance of funding sources?
There have been some whispers of deteriorating credit quality at the major platforms; with the industry's 2016 troubles arguably originating when Moody's put a major marketplace loans-backed securitisation on review for downgrading (subsequently deciding against a cut). There have been significant movements in the interest rates charged by the major platforms. All this begs the question: are marketplace loan portfolios still performing as expected?
It was primarily a failure of internal controls that led to the dismissal of Renaud Laplanche from Lending Club in May. Are we confident that this sort of mistake couldn't happen again; or elsewhere in the industry? What key lessons has the industry learnt during this year?
SPEAKERS
11:30am - 12:00pm
SESSION
The evolution of the marketplace lending ecosystem
The marketplace lending ecosystem is something that's often referred to at industry gatherings, but rarely scrutinised in much depth. With most of the companies which make up this ecosystem working to in some way streamline the process of investment, Eric Thaller of Prosper grills a panel of ecosystem companies on whether or not they're fit to the task.
What needs to be done to get secondary markets up and running? Are existing standards of transparency allowing genuine scrutiny to be brought to bear on platform loan portfolios? How could existing standards of disclosure be improved?
How can the due diligence process be improved? Can comparability between platforms be improved? What role should the industry body/regulator play in seeking to standardize definitions and calculation methodologies?
What data provision standards should be put in place for retail investors? Is there a requirement for independent loan tape data validation? Should securitizations be filled with homogenous or heterogeneous pools of loans?
What are the barriers to widespread adoption of securitization by institutional investors?
What changes would make banks more inclined to support the securitization market?
SPEAKERS
12:00pm - 12:30pm
SESSION
Why diversity of funding matters
SPEAKERS
12:30pm - 01:00pm
SESSION
Retail investors will become the more important source of capital in marketplace lending - Agree or Disagree
01:00pm - 02:00pm
SESSION
Lunch
SPEAKERS
02:00pm - 02:30pm
SESSION
Defining the universe: How broad is & alternative credit as an asset class?
02:30pm - 03:00pm
SESSION
Transparency in direct lending
A panel featuring a number of direct lending platform representatives (as distinct from marketplace lenders!) are interrogated about the characteristics, risks and historical performance of the assets that they're originating, effectively showcasing to investors the nature of these assets. The thinking is that companies like AltFi Data are able to perform analysis on (and present) data relating to marketplace lending loan assets, owing to the high level of disclosure in that segment of the alternative finance space. Clearly it's more difficult in the direct lending space, and we intend to use this panel as a means of comparison.
Further to the above, we’re also keen to investigate what level of disclosure the major direct lenders make available to their investors, in what form that disclosure is delivered, and finally whether or not independent third party data companies have any role to play in the process of disclosure and analysis.
SPEAKERS
03:00pm - 03:30pm
SESSION
Accessing balance sheet portfolios
The purpose in this panel is to explore in detail how institutional investors can tap into direct lending portfolios. There are various methods for achieving this. Companies like OnDeck, for example, have adopted lending models, whereby some loans are funded on balance sheet and others through an institution-only marketplace.
But of course there are other methods, including gaining exposure to direct lenders via a fund. Ranger Direct Lending, for instance, is an LSE-listed investment trust which offers investors exposure to a broad array of balance‐sheet funded direct lending platforms. What are the pros and cons of investing via such a vehicle and how is the performance of these sorts of vehicles measured? Is there an appropriate benchmark for success?
What is the role of specialist access platforms in this context the likes of Orchard, NSR Invest, etc.? Why would investors choose to hand over allocation responsibilities to one of these entities? What is the core value proposition? Is there any tension between these sorts of platforms and the origination platforms themselves in terms of owning investor relationships?
SPEAKERS
03:30pm - 04:00pm
SESSION
Coffee & Networking
SPEAKERS
04:00pm - 04:30pm
SESSION
Secured vs. unsecured: Which offers the best risk& adjusted returns?
The alternative finance industry offers investors a broad array of opportunities, encompassing various kinds of secured and unsecured investments. How easy is it to compare and contrast value between the many different niches? What are the key factors to consider in making such a comparison? It is not uncommon for platforms that are originating, say, property backed loans to offer gross returns that far outstrip those offered by unsecured lending platforms. How do we make sense of this?
This panel features a number of originators of secured loans, but the security varies substantially platform-to-platform (property, infrastructure, receivables, etc.). For investors, is this level of interplatform diversity a strength or a weakness of the sector?
What is the role of third party analytics companies in elucidating value between such companies? Is it possible to standardise data an industry that encompasses so diverse an array of assets? How important is standardisation for investors?
SPEAKERS
04:30pm - 05:00pm
SESSION
Better banking? How and why are the banks beginning to make use of new technologies?
Whether banks and alternative finance providers are competitive or collaborative has been the subject of some debate throughout the lifetime of the industry. It now seems clear that there are strong synergies between the two. The most prevalent trend appears to be that of selective innovation, whereby the banks cherry-pick certain aspects of fintech models and incorporate those into their own processes. This has been executed in a variety of ways. In some instances banks have effectively licensed a platform technological infrastructure. In others we've seen banks make referrals to alternative lenders. But what will the future hold? Are banks and platforms bound to come closer and closer together?
Given the turmoil that the industry has faced this year, does anybody still believe that alternative lenders can beat the banks? Or is the truth that online lenders tend to operate in niches which fall outside of the banks' core activities?
Is there a hotspot for bank-platform collaboration? Short-term, unsecured consumer and business lending - with a particular focus on point-of-sale, big data, and machine learning - seems to be one.
Are alternative lenders concerned about traditional financial services companies - such as Goldman Sachs, AmEx, etc. - entering into the online lending sector?
SPEAKERS
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