Commoditization of online lending


TimmanaG, I think you are describing something similar to the ABS markets. Securitization an structuring creates fixed-income assets that can be calibrated to match demand from institutional investors who need those assets.
If I’m a pension fund that needs to earn L+90 on AA rated 5 year paper, for example, and I want exposure to consumer credit, at the end of the day I don’t care that much if the underlying on a cusip is portfolio of credit card receivables, unsecured installment loans, or something else …
Consumers, however, definitely have preferences for how they like to consume credit and in what priority they will repay different types of debt.
The origination platform has the job of figuring out how to transform generic “consumer credit” into a form that is most attractive to borrowers (thereby finding the most attractive pricing structure for both sides of the transaction), marketing the product to those borrowers, and to some extent being smart about how measure and price the risk at the borrower level (although I would argue that this is of secondary importance.)