Marketplace lending, financial analysis, and the future of credit
- John Wiley & Sons, 2016
- xxiii, 317 p. 26 cm.
integration, profitability and risk management
Includes bibliographical references and index. PART ONE Fintech and Online Lending Landscape-Where Are We Now? 11-- CHAPTER 1 Introduction to the Business Models in Financial Technology 15-- 1.1 Innovation Themes in Fintech 15-- 1.2 The Promises and Pitfalls of Fintech Business Models 20-- 1.3 The Pitfalls 22-- 1.4 Why is Financial Technology Innovation Important? 23-- 1.5 Challenges and Roadblocks for Fintech Companies 24-- 1.6 Fintech is a Long-Term Play 26-- 1.7 Concluding Remarks 27-- CHAPTER 2 How Does Online Lending Work? An Overview with a Focus on Marketplace Lending 29-- 2.1 Reliance on Technology and Data 29-- 2.2 How Do Online Lenders Differ From Banks? 30-- 2.3 Types of Online Lenders 31-- 2.4 Some Background on Peer-to-Peer Networks 36-- 2.5 The Business Model of Marketplace Lending Platforms 40-- 2.6 Onboarding Process 41-- 2.7 Comparing Marketplace Loans with Bank Credit or Credit Card Debt 44-- 2.8 Who are the Alternative Borrowers? 47-- 2.9 Who Are Investors in Marketplace Loans? 48-- 2.10 Underwriting and Credit Scoring 48-- 2.11 Regulation 49-- 2.12 The Response of Banks to Online Lending 51-- 2.13 Concluding Remarks 52-- CHAPTER 3 What Made the Rise of Online Lending Possible? 57-- 3.1 Technological Factors 57-- 3.2 Social Factors 62-- 3.3 Structural Factors 63-- 3.4 The Perfect Storm 65-- 3.5 A Divergence of Trends 66-- 3.6 Concluding Remarks 67-- CHAPTER 4 Why Fintech Lives Outside of Banks 69-- 4.1 The Technology Mudslide Hypothesis: Sustaining Innovation vs. Disruptive Innovation 70-- 4.2 Will Banks Notice the Next Fintech Breakthrough? 73-- 4.3 Why Do Banks Have Difficulty in Innovating? 76-- 4.4 Developing Core Competence in Financial Technology Innovation 79-- 4.5 Concluding Remarks 81-- PART TWO The Status Quo of Analytics in the Financial Industry-The Perspective of Banks 83-- P2.1 Banking is Innovation 84-- P2.2 Banking Goes Mobile 84-- P2.3 Banks Are Far From Dead 85-- P2.4 How to Read This Part of the Book 85-- P2.5 What We Discuss in This Part 86-- CHAPTER 5 Financial Contracts 89-- 5.1 Contract Elements 89-- 5.2 Time in Financial Contracts 90-- 5.3 Contract Mechanisms Producing Financial Events 92-- 5.4 Concluding Remarks 106-- CHAPTER 6 Markets 107-- 6.1 Real-world and Risk-neutral Expectations of Markets 108-- 6.2 Economic Scenarios Based on Real-world Probabilities 109-- 6.3 The Risk-neutral Expectations 110-- 6.4 Beyond Market Risk-Free Rates 113-- 6.5 Discounting Cash Flows 116-- 6.6 Considering Market Elements in P2P Finance 117-- 6.7 Concluding Remarks 118-- CHAPTER 7 Counterparties 121-- 7.1 Types and Roles of Counterparties 121-- 7.2 Descriptive Characteristics 123-- 7.3 Default Probability 124-- 7.4 Credit Ratings 129-- 7.5 Credit Spreads Based on Real-world Probabilities 130-- 7.6 Link of Counterparties via Markets 131-- 7.7 Concluding Remarks 137-- CHAPTER 8 Behavior Risk 139-- 8.1 Prepayments 140-- 8.2 Draw-downs/Remaining Principle/Facilities and Credit Lines 141-- 8.3 Withdrawals 143-- 8.4 Selling 143-- 8.5 Default and Downgrading 144-- 8.6 Use at Default 145-- 8.7 Recoveries 146-- 8.8 Concluding Remarks 147-- CHAPTER 9 Credit Exposures 151-- 9.1 Gross Exposure 151-- 9.2 Net Exposure 152-- 9.3 Evolution of the Gross and Net Exposures 152-- 9.4 Exposure Distribution 155-- 9.5 Credit Losses 156-- 9.6 Link of Counterparties via Credit Exposures 157-- 9.7 Concluding Remarks 158-- CHAPTER 10 Credit Enhancements 161-- 10.1 What are Credit Enhancements? Types and Structure 162-- 10.2 Asset-based Credit Enhancements 162-- 10.3 Counterparty-based Credit Enhancements 165-- 10.4 Additional Elements Considered in Credit Enhancements 168-- 10.5 Extending Credit Enhancements in Marketplace Lending 170-- 10.6 Concluding Remarks 175-- CHAPTER 11 Systemic and Concentration Risks 177-- 11.1 Credit Exposure Systemic Risk 177-- 11.2 Counterparty Systemic Risk 180-- 11.3 Systemic Risk Exposures and Losses 183-- 11.4 Credit Exposure Concentration Risk 184-- 11.5 Counterparty Concentration Risk 185-- 11.6 Systemic Risk and Portfolio Diversification 187-- 11.7 Concluding Remarks 187-- CHAPTER 12 Liquidity, Value, Income, Risk and New Production 189-- 12.1 Liquidity 190-- 12.2 Value and Income 197-- 12.3 New Production 203-- 12.4 Treasury and Funds Transfer Pricing (FTP) 205-- PART THREE Toward the Future of the Hybrid Financial Sector 215-- P3.1 Dangers of a Big Bang Approach to Catch up with Technology Innovation 216-- P3.2 The Need to Collaborate in a Hybrid Financial System 217-- CHAPTER 13 Profitability and Risk of Marketplace Loans 219-- 13.1 Underlying Assumptions of the Analysis 220-- 13.2 Risk Factors 222-- 13.3 Portfolio Construction 224-- 13.4 Modeling Portfolio Performance 226-- 13.5 Risk Management 236-- 13.6 The Road Forward 246-- 13.7 Concluding Remarks 247-- CHAPTER 14 Digital Competencies and Digital Dilemmas 251-- 14.1 Digital Competencies 252-- 14.2 Digital Dilemmas 255-- 14.3 Concluding Remarks 260-- CHAPTER 15 Digital Strategy 263-- 15.1 Who Needs Digital Strategy? 263-- 15.2 Frameworks to Analyze the Impact of Innovation 264-- 15.3 Spotting Signs of Trouble on the Horizon 267-- 15.4 How Banks Can Overcome the Innovator's Dilemma 269-- 15.5 From Producer to Supplier and Moving to a New Singularity 271-- 15.6 From Closed Innovation to Open Services Innovation 272-- 15.7 The Role of Leadership in Driving Emergent Strategy 273-- 15.8 Concluding Remarks 274-- CHAPTER 16 The Hybrid Financial Sector 277-- 16.1 Forces of Competition in the Digital Age 277-- 16.2 The Dangers of Knife Fights 279-- 16.3 Good Ideas in Marketplace Lending That Might Be Here to Stay 280-- 16.4 The Alternative to the Hybrid Financial Sector: A Doomsday Scenario for Established Banks? 286-- 16.5 Concluding Remarks 286-- CHAPTER 17 Unified Analytics 289-- 17.1 Why Do Marketplace Lending Platforms Need Unified Financial Analytics? 290-- 17.2 An Overview of a Unified Analytics Platform 296-- 17.3 Concluding Remarks 301--
Marketplace Lending, Financial Analysis, and the Future of Credit clearly explains why financial credit institutions need to further innovate within the financial technology arena. Through this text, you access a framework for applying innovative strategies in credit services. Provided and supported by financial institutions and entrepreneurs, the information in this engaging book encompasses printed guidance and digital ancillaries. ; ; Peer-to-peer lenders are steadily growing within the financial market. Integrating peer-to-peer lending into established credit institutions could strengthen the financial sector as a whole, and could lead to the incorporation of stronger risk and profitability management strategies. ; ; Explain (or Explore) approaches and challenges in financial analysis applied to credit risk and profitability ; Explore additional information provided via digital ancillaries, which will further support your understanding and application of key concepts ; Navigate the information organised into three subject areas: describing a new business model, knowledge integration, and proposing a new model for the Hybrid Financial Sector ; Understand how the rise of fintech fits into context within the current financial system ; Follow discussion of the current status quo and role of innovation in the financial industry, and consider the financial technology innovation landscape from the perspective of an entrepreneur ; ; Marketplace Lending, Financial Analysis, and the Future of Credit is a critical text that bridges the gap in understanding between financial technology entrepreneurs and credit institutions.