The competitive advantages of expediency and efficiency in the alt-fi world were highlighted at Lendit 2015 this week, where multiple companies announced platform refinements designed to provide an enhanced user experience.
New York-based AmeriMerchant provides working capital solutions such as merchant cash advances, business loans and inventory purchase programs. Their new online application 2.0 platform can provide SMB’s with real-time decisions in under one minute and funds in as soon as two days.
Enhancements were also made to security and the ability of a marketplace lender using AmeriMerchant’s technology to customize their page with logos and other branding to maintain a consistent user experience.
“Marketplace lenders made an estimated $8.8 billion in loans in 2014,” said AmeriMerchant CEO and Founder David Goldin. “Thanks to innovative technology like our online application, it’s clear why the industry is expected to originate $1 trillion in loans annually by 2025. These products and services give SMBs across the country immediate access to the capital they need to help our local and national economies grow.”
The technological gains are not limited to North America. Buenos Aires – based Afluenta unveiled the fourth version of its P2P platform with unique features catering to each of new, experienced and professional lenders, part of a series of improvements they took in preparation for a regional expansion to Peru, Mexico and Colombia.
Those enhancements include increased capability from both tablets and mobiles, a key feature for any company wishing to succeed in countries with remote and unbanked populations but also with high mobile penetration rates.
Of course it helps when those platforms offer access to rare levels of returns.
“We are glad to welcome institutional investors to join us into the online lending marketplace opportunities across Latin America to enjoy net yields not available in more developed countries,” said Afluenta founder and CEO Alejandro Cosentino. “During the last 12 months Afluenta delivered an outstanding annual net return of 21% measured in US dollars.”
To date Afluenta lenders have issued more than 110,000 fractional loans resulting in more than $4 million of funding to their community peers.
Other companies are seeing alt-fi’s success and are jumping into the sphere. New York-based Credibility Capital chose Lendit to announce the launch of its online lending platform geared toward prime credit small business borrowers. Credibility Capital uses proprietary underwriting to match borrowers with capital sources such as hedge funds, family offices, banks and insurance companies.
Prospective borrowers are assigned a Credibility Capital Risk Score which uses an applicant’s credit history and payment data along with key merchant data and other sources to determine risk level and to make quick lending decisions.
“Because of our partnership model, we can drive down borrower acquisition costs and pass on the savings to small businesses while at the same time delivering an attractive return to our institutional investors,” said Credibility Capital President Brett Baris.
Many alt-fi platforms like Credibility Capital develop proprietary technology completely in house or with API partners prior to launching. Others tap that technology post-launch at later stages in the development to increase efficiency and to deliver added value to customers.
Eleven Chinese peer-to-peer lenders now incorporate FICO’s Alternative Lending Platform. The companies, including giants CreditEase and Renrenmoney.com are taking the increased steps as China’s alt-fi industry suffers through a credibility gap after 275 lenders went bankrupt in 2014, 3.6 times the bankruptcies in 2013.
Much of the alt-fi industry is driven by the need to continually refine the technologies which provide them with the competitive advantages of speed and accuracy. As more players enter the space, these enhancements may result in increasingly small improvements, much like the hundredths of a second shaved off a peak miler’s personal best.
For the foreseeable future, there are still plenty of large gains out there, as companies continue to identify new data points which are increasingly accurate risk indicators.
“In terms of improving efficiency in API development, we are in the first or second inning of a nine-inning game,” said Merchant Cash and Capital founder Stephen Sheinbaum.