[Editor’s note: This is a guest post from Stephen Bisbee, the CEO & President of eOriginal. eOriginal specializes in digital transaction management to offer transparency and verifiability to marketplace lending investors.]
For the past few years, marketplace lending has captured the imagination of investors and the interest of the business press. However, recent headlines have thrust the industry into a less than positive light.
Marketplace lenders (MPLs) have mainly focused on digital loan origination. However, it’s critical that they enhance and extend digital transaction capabilities to more securely manage and transfer loan agreements as financial assets after they have been completed and signed. Unfortunately, many MPLs too often fail to consider these essential post-signature management needs, which are becoming even more important with growing investor scrutiny and the shadow of greater government regulation.
Marketplace lenders should be seeking to adopt the processes and technology that adheres to best practices to alleviate concerns with legality and transparency regarding not only the documentation, but the data used to create the documentation and represent the loan elements to investors and regulators.
Currently, there is a gap between basic content and document management and the higher level of document authentication that the industry and, ultimately, investors, should require. From digital transaction management (DTM) needs ranging from secure vaulting, to pledging, collateralizing or securitizing in the secondary market, each and every transaction should be treated as financial assets that must be verifiably secure, legally compliant, and enforceable.
Investors rely heavily on data, and that data must be trustworthy. To paraphrase the Co-Founder and CEO of NSR Invest, Bo Brustkern’s Guest Post in CrowdFundBeat: Investor loan selection systems are only as reliable as the data they receive. If inaccurate data is sent representing loan agreements, then systems will very likely make an imprudent judgement about which loans to buy for clients.
Brustkern is right on the money. Fortunately, technology now exists in significant production volumes across the asset classes, including in marketplace lending, to make all of this possible. [Read more…]