CROWD2FUND is publishing its loanbook for the first time and has analysed the data to forecast investor returns more accurately.
Detailed information on loans, including late repayments and defaults, will now be available to read online, as well as rates offered to borrowers and investors’ returns.
The peer-to-peer business lender said that its investors could use the data to make better-informed choices.
Crowd2Fund’s analysis of its loanbook found that in a worst-case scenario, where no defaulting loans are recovered, its investors will still generate annual returns of 6.47 per cent after fees.
However, in a best-case scenario, where some of the defaulting loans are recovered, investors can expect to earn 8.51 per cent after fees.
Until now, Crowd2Fund had advertised an ‘estimated’ APR of 8.7 per cent before fees and bad debt.
“The key conclusion is that analysis of individual investor portfolio performance shows there are very few investors who are currently losing money,” said Crowd2Fund.
“In the best case, only 0.44 per cent of active investors are expected to make a loss; and worst case, with defaulting payments written off, it is only 1.83 per cent.
“The purpose of these models is to allow investors to make better-informed choices. Such transparency enables Crowd2Fund to open up to the crowd, marking a positive milestone for the development of P2P lending.”
Transparency within the P2P industry has been under the spotlight recently, after the Peer-to-Peer Finance Association relaxed its rules so that its members no longer had to publish their entire loanbooks online.
The industry trade body – which does not include Crowd2Fund among its members – now allows platforms to either publish their entire loanbook or provide a detailed breakdown of loans. ‘Big three’ platform Funding Circle withdrew its downloadable loanbook in June and instead launched a statistics page that will be updated every three months.
“Crowd2Fund are increasing their transparency and believe that this will be a key factor in generating higher returns,” the platform said.
“Every deal listed can be reviewed by the public in detail, with enough information for individuals to make a balanced investment decision. This means that bad deals can also be flagged by the crowd, which is a step forward in the P2P lending industry.”
Crowd2Fund has been investing in technology to improve performance. Earlier this year, the firm partnered with Australian company InDebted, to help automate and enhance the recovery process using AI capabilities.
It is also planning to introduce enhanced secondary market features to allow investors to trade distressed loans more easily.
Click here to watch Crowd2Fund chief executive Chris Hancock explain why they decided to publish their loanbook and performance data.