How diverse securitisation is helping lenders to get ahead

by Mike Wood29 Sep 2021

Non-banks need to have a diverse securitisation platform to stay competitive, according to one lender CEO.

NOW Finance has announced an institutional grade funding platform to develop from a balance-sheet funding model to a more expansive platform, and CEO Richard Blumberg has explained their growth through the prism of their more diverse securitisation program.

“Debt investors are clearly looking to place funds in a diversified and stable asset class with significant excess spread and opportunity for growth,” he said.

“We’ve been delighted with the strong investment appetite in our ABS programs which is a key enabler for our growth strategy. We plan to go to market with new ABS transactions every 6 to 9 months, and we’re looking forward to welcoming new investors into the program.”

“At the most fundamental level, it’s allowed us to provide certainty to our partners, whether they be brokers, aggregators or white label partners, by maintaining consistent personal loan eligibility criteria, unhindered by volume constraints.”

“Just as importantly, it’s meant we can offer consistent pricing, without charging customers any fees, ever, which has enabled us to carve out a clear point of differentiation from our competitors.”

“The positive feedback loop we’ve created has enabled us to provide a very competitively priced product to our customers and scale even further.”

“And in a very competitive low interest rate environment that’s become even more critical. Our low cost of funds has meant we’ve been very effective at defending a consistent net interest margin in a highly competitive market.”

“This is especially important in situations where liquidity is at risk of drying up like it did in the early part of the Covid 19 pandemic, where having a good spread of credible institutional investors allowed us to pivot when certain funders looked like stopping or limiting their funding activity.”

“The P2P funding alternative has proven to be unreliable and expensive. The strategic choice we made early on to be a balance sheet lender has given us a clear competitive advantage that we will continue to build on.”

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