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Prosper February Update

We’re a little over a month into the New Year and already it’s shaping up to be another year of growth and momentum for both Prosper and the peer-to-peer finance industry. January was our biggest month ever, with a total of $67.06 million in loan originations. This momentum follows a very successful 2013, where we grew from just $9 million in loan originations when the new management team took over Prosper Marketplace in January, to $59 million in loan originations in December. Even more importantly in 2013, we focused on improving our customer experience for both borrowers and lenders, stabilizing the company, and setting ourselves up for continued growth in 2014.

Our goal since day one has been to provide a marketplace that disruptively changes the way borrowers and lenders gain access to personal lending and we remain steadfast to that goal as we head into 2014. To that end, we are investing heavily in product enhancements, great customer service, and an emphasis on our retail investors.

Commitment to All Investors

I have gotten a lot of questions and comments recently about the increase of institutional money in peer-to-peer lending. Over the past year, we essentially went from zero to 65% of the platform’s loans being sold to institutional lenders. Retail lenders are and always will be an indispensable component of our business. However, bringing on these institutional lenders was important to our ability to grow and scale. They added what we call “lender stability” to the platform and it allowed us to go out and market to borrowers with confidence that the loans would likely be funded quickly.

Despite that, we feel that the right balance between institutional and retail lender volume has not yet been achieved. In 2014, the goal is to enable retail lenders to get access to more loans in which to invest. Some of the ways that we are doing that is by limiting institutional access to the fractional loan pool and by simply not accepting new institutional money on the platform. I hope that as the year progresses, retail lending will invest in a meaningful percentage of the loans originated through the platform as we grow our overall volume.

We will continue to look at new ways to improve the retail lending experience and to grow loan volume and therefore make investing in loans easier. We are looking at new avenues to attract more borrowers to the site, including expanding our marketing channels with additional advertising and direct marketing. We are also exploring new partnerships that would give us valuable exposure to potential borrowers with innovative offers.

Finally, I want to address the removal of the Loan Description and Loan Details fields. In September, we addressed many of your questions and concerns on this topic. It’s something we were testing on the new borrower application and we hadn’t made any firm decision to permanently remove at that time. After an additional five months of testing, and the rapid growth we have seen since this change, we have decided to make the change permanent.

A look back at 2013

As I mentioned, 2013 was a great year for Prosper and the industry in general. We closed December with $59,775,615 in loans issued for the month, which is a 17.56% increase over November, 2013 and an astounding 522% increase over December, 2012. In 2013 a total of $357,437,811 in loans were originated through the platform, a 133% increase over 2012 and a 376% increase over 2011. You can see the growth demonstrated in the graph below.

Prosper Originations over 2013

We also made important changes to the business. Over the course of 2013, Steve, Ron and I recapitalized Prosper Marketplace, restructured the Board, and reorganized the management team into a group of focused professionals with a collective purpose. We also implemented customer-oriented solutions that helped to stabilize and legitimize the business. Some of the things we did include:

  • Established protection for all of the platform’s lenders regardless of size, by forming a new legal entity called Prosper Funding LLCProsper which is a wholly owned subsidiary of Prosper Marketplace and is now the owner of all loans tied to Notes and the issuer of all Notes on the Prosper platform.
  • Prosper Marketplace entered into an agreement to settle the class action lawsuit allowing us to move forward and focus on growing the business.
  • Brought on Institutional class customers to the platform to provide lender stability.
  • Improved the platform’s borrower experience and the technology infrastructure.
  • Hired a new Chief Product Officer of Prosper Marketplace and reoriented into a product focused organization.
  • Transitioned the platform over to the FICO 08® scoring model. This change more directly aligns Prosper with industry standards and enables us to better meet borrower expectations with rates and offers.
  • Scaled Prosper’s customer service operation to better meet the needs of both sides of our platform.

As we look ahead, we’re extremely optimistic about our growth, and project that loan originations will average just above $100M per month. We look forward to bringing our customers even better products and services, and continue to value your feedback.

Aaron Vermut
President, Prosper Funding LLC

02/07/2014 by in Borrowers, Featured, Lenders, Prosper News

Prosper System Upgrade This Weekend

In my previous updates, I have mentioned that we are working on some exciting things here at Prosper this summer. This weekend, the Prosper team worked very hard to implement some much needed improvements and updates to the borrower onboarding experience. We are happy to announce these changes are complete and live on our site. We will resume our normal loan-posting schedule Monday at 9 AM.  With this upgrade complete, we will be in a better position to bring more borrowers on to the platform and provide our lenders with a larger volume of loans to choose from.  The key changes we made are:

  • Transition to FICO 08® Scoring Model: As we mentioned in our blog on this topic that a large portion of the technical upgrade this weekend was the transition to the FICO 08® Scoring model.   Using FICO 08® in conjunction with our Prosper Rating will strengthen our credit policy by more directly aligning us with industry standards and will enable us to better meet borrower expectations with our rates and offers.
  • Improved borrower experience: We’ve recently released an optimized borrower experience on our website which will provide a smoother onboarding process for new borrowers. These changes include increased access points to customer service assistance (added an 800 number for live customer service), fewer field requirements, and a streamlined application process.

Our focus this year has been on building a foundation from which we can provide better service to borrowers and lenders along with scaling the activity on the platform in a more cost effective manner. This update was a critical part of achieving these goals. The Prosper platform will continue to evolve and grow as we understand the needs of our increasing member base.

Thank you for your patience this weekend while we worked on what turned out to be a very large implementation.  Feel free to leave any questions, comments, feedback, etc. below.

Aaron Vermut
President, Prosper Funding LLC

09/08/2013 by in Borrowers, Featured, Lenders, Prosper News

RESOLVED: Prosper Third Party Vendor Experiencing Technical Issues, Slowing Pace on June Originations

These issues have been resolved. Please refer to our follow up post here.

**Original update**

We have seen record volume here at Prosper over the past few months and are excited to continue that growth. This week, we are experiencing a limitation with our customer relationship management system. Over the weekend a technical issue developed which is affecting the mechanics of our verification process. We are working closely with our vendor to get this issue resolved as soon as possible. The loans are still coming onto the platform at the expected growth volume for June; however, our verification team’s production has slowed slightly while the issue is addressed. As a result, the pace of June’s origination numbers has also slowed. We want to assure our members that we are on top of the problem and are focused on the quality of originations as well as the volume. We expect originations to return to normal processing when the technical issues are resolved. 

We recognize the inconvenience this causes both borrowers and lenders and will keep Prosper members updated here as progress is made. Please check back for more information.

06/13/2013 by in Borrowers, Featured, Lenders, Prosper News

Prosper Kicks off Summer with New Records, New Office Space and More

The momentum continues at Prosper with our second consecutive record-setting month. With over $25M in loans, May sets a new record for the best month ever in loan originations, bringing the total to more than $525M to cross the platform since inception. 2,436 loans were originated through prosper (the largest loan volume in the platform’s history), averaging $10,278 per loan. This is 23.7% growth over April, 2013 and 95.4% growth year over year from May, 2012 in total dollars loaned. We’ve also more than doubled the platform’s origination total of 6 months ago, achieving an average monthly growth of over 40% over the last 3 months.

During the month of May, Prosper Marketplace, Inc. (“PMI”) welcomed a new member to its executive team. Ken Niewald joins PMI as the incoming Chief Financial Officer. Ken has also been named our Treasurer. Ken brings over 25 years of experience in the financial services industry including his time as partner at Marquis Advisory and Tatum as well as CFO for Wells Fargo Funds Management. Ken joined just as the headquarters moved to a new location in downtown San Francisco. The new headquarters offer some much needed space for PMI’s growing team at a cost savings.

Over the past couple months we have begun reconciling customer data regularly throughout the month rather than at the month end. This has permitted us to move lender statement distribution up from the 11th to the 2nd business day of the following month. We have accomplished this in both April and May, and intend to continue with this new process moving forward.

The month of May also marks our second month of the Whole Loans program. We understand that this program has generated a lot of discussion and comments from our retail lenders. I want to reassure this group that we are committed to creating a place on our platform for both institutional and retail lenders. In May, 54.2% of loan originations came from the standard loan pool while 45.8% came from the whole loan pool. The 54.2% that originated through the standard pool represents more than $13.5M in loans. This number nearly doubles what was originated in loans across the entire platform in January or February of this year, before the introduction of the whole loans program. We are happy with the performance of the Whole Loans program and the capability it provides in enabling a balance between institutional and retail lenders.

With the increased demand from our lender base in May, we recently launched the largest marketing campaign in the platform’s history. Our goal over the summer is to meet new lender demand by maintaining the consistent growth reported in March, April and May of this year. We have mentioned before that we’re looking closely at the borrower experience during onboarding. This is moving along nicely and we should have more progress to report soon.

For those of you following the improvements made to our collections services, we have made some great progress, and will provide a more comprehensive update in the middle of June.

I would like to thank you all again for your ongoing participation in these posts. Please keep the feedback coming!

Aaron Vermut
President, Prosper Funding LLC

06/03/2013 by in Borrowers, Featured, Lenders, Prosper News

Prosper Reports Record Month in April

Prosper has just finished its best month ever for loan originations – we have reached $20.2M in loans for April, and $500M since inception. April’s performance was achieved with the largest volume and the highest average loan amount in history with 1,969 loans and $10,277 respectively. This amount is a 34% growth over March, 2013 and 74% year over year from April, 2012.

Over the past week, many of you have asked about the changes in loan volume. We have seen two trends; first, there have been fewer B through HR rated loans available. Second, loan origination volume through Prosper’s platform has actually gone up, as you can see above. To explain these seemingly contradictory trends, I’d like to start by saying that I believe the industry has reached an inflection point. Peer-to-peer lending is increasingly accepted as a viable investment class. Both retail and institutional lenders are realizing that peer-to-peer loans represent a very interesting and potentially profitable way to obtain unprecedented access to investing in consumer loans. As a result, the industry (not just Prosper) is experiencing a spike in demand. We are aggressively ramping borrower marketing campaigns to generate more loan inventory to meet that lender demand. We are also looking closely at the borrower user experience and application process over the coming months.

All in all, these short term challenges are a positive development for the industry. As we grow, we will help more consumers get their loans funded and therefore offer our lenders more opportunities to expand their investments in consumer loans.

As I mentioned in my April update, we introduced a whole loans program in a beta period for our institutional investors. This has been going well – over $5.8M in loans originated through the whole loan pool in April. This makes up about 28% of loans originated through the platform in April and the remaining 72% originated through the fractional loan pool. On May 3rd we will officially add the whole loans pool as a permanent part of our service.

Here are some details on how it will work:

Prior to posting times, Monday thru Friday only, a subset of randomly selected loans will funnel into a whole loan pool, while all others will post normally into the standard, fractional loan pool. Those loans in the whole loan pool will remain there exclusively for a brief 45 minute period of time. If the loans are not purchased from the whole loan pool within 45 minutes, they will funnel into the fractional loan pool at regularly scheduled posting times, becoming available for funding on the standard Prosper platform. On Saturdays and Sundays all loans will funnel into the standard loan pool, giving our retail lenders the opportunity to bid on all loans available during that period.

This new process is in line with market conditions and enables us to offer whole loan buyers a solution to meeting their mandate and specifications without disrupting the retail lender experience. Additionally, for loans in the fractional loan pool, lenders will now be limited to 75% funding, ensuring that all retail lenders continue to have equal access to a large number of loan options.

Now back to April. In addition to a record month in terms of loan originations, we also made some great progress. We launched a new logo and identity. We would love to hear what you think. As promised, we increased the loan cap from $25,000 to $35,000. Many of you have noticed that this change also included removing our one year loan option. The reason for removing this is simple; one year loans are not in high demand by our borrowers. We will continue to make changes and enhancements like these to balance the needs of both lenders and borrowers.

We also welcomed back our Washington lenders. We appreciate your patience while we worked with the Securities Division of Washington’s Department of Finance to obtain approval and reopen peer-to-peer lending in Washington.

Finally, we are approaching the deadline to transfer to the new enhanced API service we introduced to our lenders back in March. The feedback on this has been tremendous and we are transitioning everyone over. The last day to transition to our new API for lenders is May 1st. If you’re interested in this, please email us at investorservices@prosper.com. If you’re already using it, great! A new password functionality in the settings section will be available in May. Stay tuned.

More exciting things are still to come over the next couple months.

  • Improved collections: We are still very focused on increasing the success of our collections. We have made several changes over the past couple months to increase call intensity and work closely with delinquent borrowers. We continue to enhance this service and will keep you updated here as changes are made.
  • Document Update Functionality: We have begun development on a tool that will allow our borrowers to upload documents directly to our site. This will help to streamline the borrower experience and allow our verification team to move more quickly on verification initiatives.
  • Ramping Borrower Inventory: Over March and April we focused a lot of resources and attention on the lender side of our platform. This has allowed us to onboard a lot of eager lenders. As stated above, in May, we are ramping up our borrower marketing initiatives to meet these new lender needs and will be funneling more and more loans onto the platform.

We are really proud of the progress we’ve made so far, and have many more exciting updates to come as we work to make Prosper the best peer-to-peer lending platform. I’d like to thank everyone who commented on my March post for their thoughtful questions and considerate debate. I’ll be reading and responding so feel free to ask questions or add comments below.

Thank you,

Aaron Vermut
President

04/30/2013 by in Borrowers, Featured, Lenders, Prosper News

 

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Notice: Blogs and other materials posted on or linked from this page that use the name "Prosper" generally use that name to refer to Prosper Marketplace, Inc. if published before January 31, 2013 and to refer to Prosper Funding LLC if published on or after February 1, 2013.