ThinCats Newsletter April 2017 13/04/2017
Recoveries is an integral part of many financial institutions, and one that has been written about many times before. However, the complexities of obtaining a positive result from a recoveries process deserve another explanation.
From an external perspective, it can sometimes seem that the process is inordinately slow; surely, as soon as a borrower is in default, administrators should be brought in and the Directors brought to task? In many cases, this is not the best way forward, and while it may look like nothing is happening, a careful assessment of the precise details of the case needs to happen before any decisions are made.
Once the full intricacies are known, then the best route to maximise recoveries for lenders can be mapped out – taking the time to learn exactly how the business works, and analyse processes that may help save the business and protect the assets, is generally far more successful than sweeping in with the ‘heavies’. So taking time to assess the viability of a business, and the options available, is very much in lenders interest.
We appreciate that as an investor, your priority is to find out what is happening to your money, and we understand the desire for news and updates. However, there is an initial period (which can be several months) during which a whole host of processes are being evaluated and new terms negotiated, from accounts and cash flow forecasts to management reports and possible valuations; and this all takes what can seem like a long time.
Allowing the time for each step of the process is demonstrably worthwhile; a recent recovery through the ThinCats platform took 15 months, but the outcome was entirely positive; 100% capital was returned with interest at the default rate, to all lenders. Had the quickest solution been jumped upon, there may have been a partial recovery some months before, but full payment would never have been achieved.
One of the many complications is due to the fact that the priorities of the Directors, creditors and legal advisors can all be very different. Alongside the legal frameworks that restrict how much involvement different parties can take in the process, there are an almost infinite variety of commitments, legal arrangements and contracts to mediate.
The ThinCats team has grown over the past year to include many in-house experts with a wealth of knowledge and experience, ensuring that the recoveries process is as professional, smooth and successful as it can be. Some other P2P platforms do not have the resources or the finances to support their recoveries; when loans go bad, they may not allocate funds to effectively pursue defaulting borrowers, and investors can be left to fend entirely for themselves.
ThinCats has funds that are used to drive the recoveries process, and will pay upfront costs such as legal fees, where it is commercially viable to do so, to ensure that the necessary procedures commence as quickly as is prudent. These resources, alongside our incredibly experienced team, combine to make sure that our secured loans are justly backed up.
So, if the situation arises again in the future, you can be safe in the knowledge that the ThinCats Recovery Team are working extremely hard behind the scenes, through every single detail, to make sure that they get the best outcome for our lenders, even in the least desirable situations.
By Steve Thomson, Chief Technology Officer
Headshot of Steve ThomsonAt the beginning of April, we released a number of system performance improvements for both lenders and our operations staff, as well as adding in the ability for lenders to download Nominal Ledger reports in Excel workbook format. This release has been well-received, and we are working hard to fix a few inevitable bugs that were not caught through testing.
On that subject, we continue on the journey to automate more of our release testing to drive down the level of bugs that we don’t catch – the ThinCats system is complex, and so we still have work to do in this area, but have already introduced automation of testing across multiple browsers.
For lenders opening new accounts, we introduced new Customer Registration screens with automated password, email, address and phone number verification checks; this improves the quality of our new customer data and reduces delays in onboarding.
We also released auction-bidding stability improvements, to reduce the incidence of locked bids which are a source of frustration, and to speed up the acceptance of successful bids.
Finally, we ran the first formal Beta test for the system performance improvements with a number of our lenders, and we’d like to thank them for their input. We will do the same for selected releases going forwards.
Coming up in Q2
We are in full swing with our preparations to support the ThinCats IF ISA product, which we hope to launch as soon possible after we have full FCA authorisation; we will of course keep you informed of our progress.
We are continuing to make improvements to the monthly processing of repayments, to make them quicker and reduce delays. Another priority is the automation of the sending and receipt of deposits and payment instructions between ThinCats and Street UK, which will obviously improve processing times. Finally for this quarter, we are adapting the ThinCats platform so that it is fully Java 8 compliant, and will be continuing to address the technical debt that we inherited from the old system.
Introducing Nick Buller
Going forwards, Nick will be taking the lead on the ThinCats technology updates. Many of you have already met him in person or via the forums, and will know how much experience he has, but for those who don’t:
Nick has huge experience in finance and technology; having spent over 10 years at Barclays at Director level, he has held CTO positions at a number of other London-based businesses, as well as working closely with me at ESF Capital as Technology Director for over a year, so is ideally placed to be leading development on the ThinCats platform.
I will continue to be involved closely with ThinCats, but will be spending more time looking at ESF technology strategy and future investments from now on.
The first quarter of 2017 has been solid – no major records smashed, but compared to previous Q1 statistics, it is the best start to a year yet. The platform celebrated its sixth anniversary in January, and followed that up by listing the 800th loan, and topping £225million in loans since the launch of the platform – a bank of achievements that we are very proud to list.
In the core area of Origination, the new members of the team have hit the ground running. They have been brought in to ensure that ThinCats can offer the broadest scope of investment opportunities possible, and are out and about, making new connections and building on old partnerships, with a focus on quality loans. The team has grown to include eight members, five of whom are regionally based, covering the length and breadth of the UK; see their individual bios here.
This is leading to an improvement in the quality of loans listed; with an increasing spectrum of industries and sectors covered, a broader range of borrower locations and a better variety of loan values and interest rates. This all helps to provide investors with more and better options for diversifying their portfolios, thereby giving the best chance of suiting your lending appetite and making a decent return on investment.
Source: ThinCats borrower industry data, 01/01/2017 to 31/03/2017
Source: ThinCats borrower geographic data, 01/01/2017 to 31/03/2017
Our Origination team are also busy working with new intermediaries; developing relationships with a variety of brokers, introducers and Sponsors throughout the UK, to further improve and widen the scope of the loans coming to the platform. We believe that our commitment to these areas, alongside the ongoing developments to the platform, will ultimately give our lenders a better investment experience.