Croudify Launches Platform for Lending Club Secondary Market

croudify_lending_club_secondary_market

A new company called Croudify recently announced that their secondary market platform for Lending Club was launching in beta. The company describes itself as a secondary trading platform that allows you to find the best listed notes based on analytical models that they have built. I spoke with Abhishek Agarwal, Croudify CEO, to learn more about the product and also signed up for a beta account myself.

What made Croudify’s platform possible was the creation of Lending Club’s secondary market API last year. In fact, Croudify was the company that worked closely with Lending Club as they were developing the secondary market. Abhishek stated that after beginning work on their product in 2015 they eventually compelled Lending Club to build the API which was eventually made public.

One the key challenges of creating a valuable platform on top of Lending Club’s secondary market is the amount of data that needs to be collected and subsequently the cost associated with collection and storage of the data. This data is used to build Croudify’s pricing models. Croudify currently pulls FOLIOfn data every 5 minutes, which takes the company just one minute to index. According to Abhishek, the infrastructure cost for this is about $8000 per month.

The team at Croudify has an immense amount of experience in data analytics. Abhishek and their Data Scientist, Mauricio Santana both spent 10+ years building data/risk models for Bank of America. The platform, along with the analytical model they have built provides recommendations of notes to purchase on the secondary market, taking into account all data points on the loan as well as aspects such as prepayment and the markup/discount of a note. They hope to eventually provide portfolio automation for both the the primary market and secondary market for both retail and institutional investors.

Logging into Croudify you are presented with a portfolio summary which includes a snapshot of your loan portfolios, holdings by states (pictured below) and the percentage of your loans that are performing.

croudify_summary

Digging into the portfolio details section will provide you with stats on currently listed notes. Croudify calculates the recommended price of each note based on their analytical models.

croudify_notes_owned

Clicking on a note shares further information.

croudify_note_analysis

Finally, on the trade tab you will see active primary (new) and secondary market (mature) loans which are available for purchase. You can further filter the loans shown by using the criteria on the left side. Below is a screenshot of viewing secondary market loans.  On the right side is Croudify’s analysis of loans for sale on the secondary market which will state “Neutral”, “Buy” or “Must Buy”. Clicking on an individual loan will share more details including Croudify’s recommended price of the loan. Underneath Ask Price is the percent difference between this and Croudify’s recommended price.

croudify_trade

Conclusion

What’s interesting about Croudify is that they are currently focused on furthering the secondary market ecosystem. A lot of progress has been made over the last year with the introduction of Lending Club’s API but there is still more that can be done. While many tools have created analytical models, Croudify goes further by providing recommended pricing to the end user.  If you’re interested in checking out the Croudify platform you can signup for a free beta account here.

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dan
dan
Nov. 29, 2016 11:05 am

Hey there,

How do you get the interface to import your lending club data? I signed up for an account but it doesn’t display any of my lending club or foliofn data. Thanks!

Abhishek Agarwal
Nov. 29, 2016 11:46 am
Reply to  dan

Hello Dan,

This is Abhishek the founder of Croudify, We are experiencing some issues with the LC connections and in the process of rolling out a new signup process.

If you can please signup again with your LC account details you should be able to see the LC details.

If any of you face similar issues like Dan please email me at abhishek@croudify.com

Fred93
Fred93
Nov. 29, 2016 3:24 pm

They want me to enter my LC credentials, yet have an essentially-empty security policy. We have no idea what steps they take or do not take to safeguard our data.

Is your database encrypted? Where are the keys held? Has your security been audited? …

Abhishek Agarwal
Nov. 29, 2016 3:56 pm
Reply to  Fred93

Hi Fred,

Abhishek here. Our security policy is available at https://croudify.com/security-policy/.

For our database we encrypt all user sensitive information that is stored on secured servers that are only accessible in US.

Our Tech lead is CISSP certified and has led security policy for companies like Mobile Iron and has audited our entire architecture.

Fred93
Fred93
Nov. 29, 2016 4:01 pm

Your security policy is essentially empty. It talks only about the fact that the web site uses https:, which is obvious.

Saying that your internal guy “audited” yourself is not saying much.

Why do you believe that your servers are only accessible in the US?

External security audit suggested.

Fred93
Fred93
Nov. 29, 2016 3:32 pm

“Croudify has built a investor focused loan default model that rate each loan through the life. These models use advanced analytics and Machine Learning to assign a ratings to each loan through its maturity cycle. The ratings are updated daily as new information is received.”

Based on what? What “new information” do you use? That sounds great, but as we all know, the only information available is the payment status and FICO score. The payment status is almost worthless for sellers, as by the time I know that my note is late, everyone else knows the same thing, and LC has published expected recovery numbers for late loans. That leaves FICO. Therefore, I presume your model is based on the updated FICO score. Why is your use of the updated FICO score better than anyone elses?

Don’t just tell me it is “investor focused” or uses “advanced analytics” or “Machine Learning!” or other buzz words. Tell me something about what you are actually doing that will make me believe you are doing something better than something someone else is doing.

Abhishek Agarwal
Nov. 29, 2016 4:05 pm
Reply to  Fred93

Fred,

I am not aware of anyone who is doing any kind of model on secondary market that is publicly available. Some people as you mentioned are using FICO bucketing to find the notes but that is extremely primitive. Even if you go with FICO bucketing I could not even sort notes on Foliofn using that simple criteria so even that primitive task is impossible.

So from a simple value perspective if you combine a simple FICO change filter bucketing with updated pricing using the latest interest rates that LC is using is a lot of value add that is not possible to do automatically on any platform right now. Yes you can do it in excel but when the data is getting updated every 5 minutes and you are never going to be able to find the best notes doing that manually.

A experience loan rating is a combination of factors you mentioned with origination variables (simple ones like DTI & PTI (new loan debt)) to more complext ones like the splines in the slopes of continuous variables to the curve of seasoning that age brings.

We have built our models using more than 57 variables with packages from scikit learn (https://en.wikipedia.org/wiki/Scikit-learn) and other open home grown tools and we are proud of it. Before starting Croudify my analytics team was building similar models at some of the top financial institutions in US.

Fred93
Fred93
Nov. 29, 2016 3:58 pm

The croudify web site contains no physical contact information of any sort. No office phone. No company address. Does croudify have an office?

I’m sorry if this sounds pushy, but I don’t like to turn over credentials for my financial accounts to folks who put up a web page giving no evidence of their physical existence.

The croudify.com domain is registered using a residential address in Fremont, CA. Based on this, I thought the company might be in California, but a California state business records search finds nothing named “Croudify”. So either there is no corporation, or it is located outside of California. Presuming the company is located in Fremont, I searched the Alameda county fictitious name records. That produced Kite, LLC dba Croudify. Bloomberg lists Kite, LLC, and gives an address and phone #. https://www.bloomberg.com/profiles/companies/1298688D:US-kite-llc of 2201 Walnut Avenue, Fremont, CA 94538, 510-407-0137. So there’s hope. Maybe they do have an office. I can’t be sure from this evidence, but at least it was possible to find a trail of some kind.

Abhishek Agarwal
Nov. 29, 2016 4:18 pm
Reply to  Fred93

If you look at the URL of the product https://trade.croudify.com. You can clearly see the KITE LLC in the URL. Also you will see that we have Extended Validation from the issuing authority. They have validated our company credentials before issuing this certificate.

You will not find this kind of validation on any other trading sites except the big banks and big financial institutions.

We built our entire app based on premise that people are ready to steal our data and we are all freaks about all the safety and security of data at croudify. We constantly put our servers to various abuses of hacking to make sure that we can have enough confidence before we go out. For us we cannot ask anyone to do anything on our site if we do not feel comfortable doing the same ourselves.

I am sure we can learn a lot from you and welcome more of your feedback.

Stephen
Stephen
Nov. 30, 2016 7:06 am

Hi Abhishek,

I was able to log in and I love the platform. After beta phase, will there be a fee to use the platform?

As an FYI – It appears the Cart Function does not work. It could be user error or testing but through I would bring this to your attention.

This will be a great tool in the future, and will cause me to invest more in Lending Club as this tool can be powerful if the right users are using it.

Thanks,
Stephen

Abhishek Agarwal
Nov. 30, 2016 9:29 am

Hey Stephen,

Thanks a lot for your kind comments. For the cart function to work on mature loans you need to have access to the trading platform on Lending Club that is available through this link https://www.lendingclub.com/foliofn/tradingAccount.action. Once you click it and ask for access it takes anywhere from 4-6 business days to activate the access. Once you have it working it should be good to go.

Another reason for the cart to not work is if you do not have sufficient balance in your account. I can get with you on phone and help you find the error. Please email me your contact details at abhishek@croudify.com

Sangharsh
Sangharsh
Jan. 28, 2018 11:30 am

Hi Abhishek,

Are you guys still working on the platform? I signed up and have following questions:
1. Why do you need $1000 in your platform, if the only thing your platform performs is better manage my Lending Club account using some data analytics. Do you transfer that money to my lending club once I have a strategy in place. Still I can put the money directly into my LC account, not sure why to first put money into Croudify.
2. Why the above requirement not mentioned while signing up or asking for SSN#?
3. How do I delete my account from your platform and delete my details?

Thanks.
Sangharsh