How it works

Marketplace Management

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Peer-to-peer lending is a relationship between Borrowers and Lenders facilitated through a marketplace. Harmoney's role is to administer the Harmoney marketplace. This page details the ins and outs of how we do that.

Marketplace Management

Peer-to-peer lending is a relationship between Borrowers and Lenders facilitated through a marketplace. Harmoney's role is to administer the Harmoney marketplace. This page details the ins and outs of how we do that.

How does Harmoney manage the Marketplace?

Both retail and wholesale funders (Lenders) can participate in loans originated on the Harmoney Platform. Wholesale Lenders may participate in funding both fractionalised and whole loans, and retail Lenders in fractionalised loans only.

Not all loans that are approved to list are shown on Harmoney's marketplace for the reasons identified below. Harmoney endeavours to manage loan flow so that the marketplace will show a representative proportion of the overall risk spread of Borrowers approved to list (subject to the exclusions below), so that Lenders to whom loans or participations in loans are allocated do not have any undue preference.

Loan listings not shown on the Website relate to:

New Product, Service, or Feature

Harmoney proactively seeks feedback from all stakeholders, including Lenders, Borrowers, regulators, industry bodies etc. We do this via surveys; call centre communications, and online correspondence and feedback loops. Based on this feedback we are constantly improving our offer with new features and services, and developing new products.

Before launching these features, services, or products, Harmoney may make the decision to channel some or all loans to wholesale Lenders for a defined period as part of the testing process. The reason for doing this is to ensure that the product and processes work as expected prior to attracting multiple Lenders on a single loan.

Changes to Risk Underwriting Process or Policy

Harmoney regularly reviews its policy and process with regard to underwriting risk. Harmoney has a data science team tasked with producing analytical work to improve the quality of the decisions Harmoney makes as to the approval and risk grading of potential Borrowers who apply to list on the marketplace.

Amendments to the credit policy and process are made following a review process where either statistical or actual experience suggests that improvements can be made. The Credit Committee will consider the analysis and recommend to our Board of Directors one of the following:

  • Level 1 - that the analysis supports a change, and that the change is unlikely to result in any material adverse effect to forecast default rates; or
  • •evel 2 - that the analysis supports change, and that the change may result in material adverse change to the forecast credit loss but that the quantum can be reasonably ascertained.

We may choose to test a level 1 change exclusively with wholesale Lenders for a period of time before making the loans available in the marketplace.

For level 2 changes, Harmoney has created an "off marketplace" specifically designed for wholesale Lenders only. Harmoney may use the “off marketplace” to test and learn in order to better establish the credit default rate likely to result given the changes. Once tested, the rules may or may not be adapted and offered to all Lenders, but this is dependent on the results of that testing. This may occur where, for example, the loan amounts sought exceed the usual limit specified on the Website, or where there are other particular credit features on the basis of which Harmoney determines to make the loan listings available to wholesale Lenders only.

Loan Flow into the marketplace

Harmoney proactively manages the flow of loans to the marketplace, attempting to ensure that marketplace receives a representation of the overall risk grade spread of Borrowers approved to submit loans.

Harmoney looks to manage this based on historical numbers and on the volume of repayments and prepayments so that there is sufficient flow of loans enabling available funds to be redeployed.

Wholesale Lenders remunerate Harmoney differently to retail Lenders. Wholesale Lenders pay a Service Fees, and may pay other upfront fees, as well as a share of income based on the net return of their portfolio. For this reason, Harmoney may allocate an increased share of loans into the wholesale marketplace.

A Loan is funded 100% by the Auto-lend Option

If a loan listing has been funded 100% by Lenders using auto-lend option, then it will not appear on the marketplace. This is because the auto-lend process runs just before the loans go onto the marketplace. Harmoney dynamically manages the proportion of loans that can be funded by auto-lend based on Lender demand and loan flow.