12 months after launching the first iteration of our auto investment facility Auto-Lend, we take a look at how Proplenders are currently using the facility, how they have embraced new customisation and the increasingly central role it now plays in funding platform loans.
Proplend Auto-Lend launched in August 2018 as a passive-invest option for platform Lenders. All you had to do was turn the facility on and you’d have your available cash invested to the next available newly funding or secondary market loan(s) – up to a maximum of 20% of overall account value in any one loan.
Manual invest remained (and still remains) the default option, but for those who preferred lower involvement investing, Auto-Lend 1.0 was a useful tool if you were happy and fully understood the fixed criteria the facility used to allocate loans. But the aim was always for Auto-Lend to be more useful to more Lenders, so shortly after launch we began working on various customisation options, first (in February) offering the option of choosing which markets your Auto-Lend allocated to.
Then in June 2019 came the real gamechanger – the ability to set your own maximum monetary investment per loan, that many of you had been asking for. Combined with the option to set your maximum loan term, Auto-Lend (Plus) can now be used in more different ways by more Proplenders – including as a convenient ‘auto-bidding’ system that allocates based on your specific preferences for each loan.
Three months on from our last Auto-Lend enhancements, we only have to look at our recent five new loans funded in five days to see how Lender adoption of the facility has changed the way in which funding day works – as well as helping us to originate more loans for the platform. Depending on the size of the loan (and unquestionably the interest rate offered), Auto-Lend is increasingly taking up most, if not all of our 0-50% LTV Tranche A.
Our token-based system enables us to accommodate as many Auto-Lenders as possible in each loan by investing their available funds, one loan part each (typically £1,000), before allocating second loan parts to those whose balances and settings make them eligible for another. For relatively small, high rate loans we’re finding that as our Lender base grows, Tranche A is not just being fully funded by Auto-Lenders, but it is being oversubscribed.
Usually oversubscription results in some Auto-Lenders not getting as many loan parts as they could have been potentially allocated but on occasion this has seen some of those who have signed up for the facility ahead of a particular loan, not getting any allocation – and if we keep starting the queue in the same position it would likely be the same group of Lenders who would keep missing out.
For this reason, we’re announcing our latest change to Auto-Lend – wherever the allocation of the previous loan left off, allocation of the next loan will pick up from (in ascending Lender ID order). In fact, we trialled the new system for the recent loans and we can see that (all things being equal), it provides a more equitable distribution.
Priority access to Tranche A for newly funded loans, does mean less availability for manual investors for this Tranche – albeit there are now fewer reasons why even traditionally manual investors can’t use the facility to improve their chances of participating. They don’t need to make themselves available at midday and they’re in complete control of when the facility is on or off and the maximum allocation into any given loan. They can micro-manage it as often as they like.
And with fewer Lenders trying to pick up loan parts at the same time, we’re seeing benefits for those who are logging in to manually for Tranches B and C (and any remaining A). Our safest, most numerous Tranche A investments having already been shared without the first come, first served rush of the past.
The higher returns available from our 51-65% LTV Tranche B and 66-75% LTV Tranche C remain as sought after as ever. Particularly given the incoming FCA peer to peer regulations, it feels right that Tranche B and C investments remain available only to those Lenders who demonstrate a clear understanding and intent to lend on this higher risk-return basis. To be in with a chance of securing one of these coveted investments, you’ll typically have needed to have done your due diligence in advance and be ready to commit funds via your dashboard – promptly at midday.
Auto-Lend has automatically allocated £8.5m to the 40 loans funded via the platform since August last year. That’s over 25% of loan parts funded during that period and growing – in recent months the facility has completely filled a couple of Tranche A only loans and has oversubscribed the Tranche A proportion of a number of loans since the additional customisation options have been added.
Over half of all Proplenders have tried the Auto-Lend functionality, with some turning it on from time to time and some leaving it on (including those who vary settings from loan to loan). We expect the usage and influence of Auto-Lend to increase as we continue to grow, and we develop the facility.
Related to this post ….
More about Proplend’s (Tranche A) Auto-Lending investment options
Blog article: Auto-Lend (Plus) Upgrades (June 2019)
Blog article: 8 Ways Proplenders Are Utilising Auto-Lend (July 2019)
Blog article: 5 P2P Loans In 5 Days This August Bank Holiday (August 2019)
