Portfolio Tools: requirements discussion

[Guest]

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[RichardF]

• Add a statement of "Kiva Risk," including a list of key risk factors and how Kiva is working to minimize them, to the Kiva - Risk and Due Diligence page.

[flann] 7:33 pm: we took many risks in building kiva
[flann] 7:33 pm: for the most part, they have paid off for the bet
[flann] 7:33 pm: ter
[flann] 7:33 pm: in some notably painful situation
[flann] 7:33 pm: s
[flann] 7:33 pm: the risks did not pay off

The Kiva - Risk and Due Diligence page notes three levels of risk.

Lending to the poor online involves 3 levels of risk

Risk 1: Entrepreneur Risk



Risk 2: Field Partner Risk



Risk 3: Country Risk

Based on its established track record, is a fourth level of risk worth noting on Kiva's Risk and Due Diligence page?

Risk 4: Kiva Risk

Yes. Right now, the engineering team is working on integrating our withdrawals process with PayPal's Mass Pay API. It's a manual process at the moment, but we're moving away from that. One of the reasons it's taken so long, is that we've seen an uptick in malicious use of the withdrawal option, and we've been fighting those fires.

On the pages about risk and due diligence, one actor is conspicuously missing: Kiva itself. There should be some discussion about the risk that Kiva might fail us.

For example, what happens with our money if Kiva's data center burns down? I see nothing anywhere about replication or backup on a remote site.

EDIT: Let me clarify: What this means is that all information about all accounts would be completely lost. However, if Kiva does have remote replication or backup, the information is not lost.

Once again, something I really like about P2P lending platforms that offer securities is that they are required to tell prospective lenders about the potential risks associate with using them.  Because Kiva doesn’t even acknowledge such a risk exists from using it on its own Risk and Due Diligence page, here’s another example from an aspirational peer in this regard.

RISKS RELATED TO LENDING CLUB AND THE LENDING CLUB PLATFORM

• We face a contingent liability for potential securities law violations in respect of loans sold to our lender members from May 2007 until April 7, 2008. This contingent liability may impair our ability to operate our platform and service the member loans that correspond to your Notes.
• We have a limited operating history. As an online company in the early stages of development, we face increased risks, uncertainties, expenses and difficulties.
• We will need to raise substantial additional capital to fund our operations, and if we fail to obtain additional funding, we may be unable to continue operations. In connection with their audit for the year ended March 31, 2008, our independent auditors raised substantial doubt about our ability to continue as a going concern due to our recurring losses from operations since inception.
• The market in which we participate is competitive and, if we do not compete effectively, our operating results could be harmed.
• If we fail to promote and maintain our brand in a cost-effective manner, we may lose market share and our revenue may decrease.
• We have incurred net losses in the past and expect to incur net losses in the future. If we become insolvent or bankrupt, you may lose your investment.
• Our substantial senior secured indebtedness could adversely affect our financial performance, ability to finance future operations, and our special, limited obligations in respect of the Notes.
• We have secured our debt facilities by pledging all of our assets except our intellectual property rights, the corresponding member loans and all payments we receive in respect of corresponding member loans.
• Our arrangements for backup servicing are limited. If we fail to maintain operations, you will experience a delay and increased cost in respect of your expected principal and interest payments on your Notes, and we may be unable to collect and process repayments from borrower members.
• If we were to become subject to a bankruptcy or similar proceeding, the rights of the holders of the Notes could be uncertain, and payments on the Notes may be limited and suspended or stopped. The Notes are unsecured and holders of the Notes do not have a security interest in the corresponding member loans or the proceeds of those corresponding member loans. The recovery, if any, of a holder on a Note may be substantially delayed and substantially less than the principal and interest due and to become due on the Note. Even funds held by Lending Club in trust for the holders of Notes may potentially be at risk.
• We rely on third-party banks to disburse member loan proceeds and process member loan payments, and we rely on third-party computer hardware and software. If we are unable to continue utilizing these services, our business and ability to service the member loans on which the Notes are dependent may be adversely affected.
• If the security of our members’ confidential information stored in our systems is breached or otherwise subjected to unauthorized access, your secure information may be stolen, our reputation may be harmed, and we may be exposed to liability.
• Our ability to service the member loans or maintain accurate accounts may be adversely affected by computer viruses, physical or electronic break-ins and similar disruptions.
• Any significant disruption in service on our website or in our computer systems could reduce the attractiveness of our platform and result in a loss of members.
• Competition for our employees is intense, and we may not be able to attract and retain the highly skilled employees whom we need to support our business.
• Our growth could strain our personnel resources and infrastructure, and if we are unable to implement appropriate controls and procedures to manage our growth, we may not be able to successfully implement our business plan.
• If we fail to retain our key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.
• It may be difficult and costly to protect our intellectual property rights, and we may not be able to ensure their protection.
• Purchasers of Notes will have no control over Lending Club and will not be able to influence Lending Club corporate matters.

[AccountAbility]

Hi Dan, I'll be happy to post it in about a week, I do not have access just now to the computer where the summary is stored.  (Charmaine, would you like to either resend it to me or post it here yourself in the meantime?  I did pretty it up a bit before sending it to Gerard with the other two summaries.)

--Diane.

Wondering whether the portfolio tools requirements summary will get posted here?

Dan

[Diane R]

Sorry for the delay.  This is what I sent to Gerard (as summarized by Charmaine, and my thanks again).

Portfolio Tools

Search Tools for Lending

Long-needed changes to the LEND page search and sorting capabilities should be implemented and propagated to My Portfolio and all other pages (See All Loans from This Field Partner, Journals,...) as appropriate. The changes made to improve searches for new loans would thus carry over into managing large portfolios and the journals. These changes would include the ability to …
--- Save and reuse sets of sorting, filtering, and search options. (mentioned several times)
--- Modify the options in effect and, if desired, save the new options under the same or a different name.
--- Establish default sets of options for each type of page to be in effect at login.
--- Search using multiple AND/OR/NOT criteria.
--- Sort on multiple fields, whether user fields, the current “Find loans” fields, or column headers.
--- Sort individual fields (entrepreneur, activity, country, partner, loan term, start date), even if they are displayed in the same column.
--- Filter the loans to be displayed by combinations of values including status, gender, sector, region, activity, country, partner, loan amount, loan term, group and individual loans, risk rating, currency exchange loss, and language. Check-box lists, ranges, etc. would be used as appropriate and would be stored as part of saved option sets.

Repeat lending: I would like to have a warning when an entrepreneur comes back again for a new loan.

Sort Tools for Portfolio

The ability to use hierarchical sorts -- that is, sort first by active status and then by date I loaned.

** (I believe this is scheduled to be fixed) the entire portfolio could be sorted, not just the page I was looking at. This was extremely useful, especially when I wanted to see all my loans sorted by country.  Not just sorting the page you are on.

The ability to sort by date I lent to a borrower.  If that isn't possible, I would like to be able to put the loans in order by date posted, date funded or business ID - something that would resemble the order I lent to them in.

A minimum of two searchable and sortable fields into which the lender can enter data for his loans should be provided. These could be used to establish personally meaningful categories and to make free-form notes.

--- Correctly sort numeric fields (loan term, start date).

Bookmark/Wishlist

Bookmark/Wishlist function on the loan/business pages, either to go into your shopping basket at  0$ thus not tying it up for someone else, or a separate listing.

Another idea would be to add a button to both the sorted listing pages and to the loan description; "Add to Wish List". Then a link to "My Wish List" would produce a list of loans in the usual format with the usual sorting options but containing only the loans in the wish list. The "Add to Wish List" button would show up as "Remove from Wish List." One could go from there to lend in the usual way. It might be a bit cleaner than having a mixture of $0 and $25 loans in the basket. It would also be a way to quickly produce a shortened list of possibilities that one might wish to investigate more deeply. For example, I might decide to fund 4 loans, but I may preselect 10 that look initially interesting, and then pare down the list.

Transaction/Loan stats

When a loan defaults, I would like to see a transaction posted showing the balance of my loan being written off.

Since it is “My Portfolio” I would like to see a totaling of the amount I have outstanding on each loan, which together with my available credits would constitute the actual total of My Portfolio.

Since I think the Transaction History is a necessary part of portfolio management, I think the loan ID (or business ID) should be a separate field there as well so you could sort by specific loan.  (Right now it is only in the description of the transaction, so extracting it to be able to aggregate all transactions on the same loan is extremely difficult.)

The lender should be able to see a repayment schedule, similar to that for an individual loan, giving the expected payments by month for his portfolio, and the actual payments for the current month. If date ranges were supported, expected and actual payments for prior months could be shown. Perhaps this should be expandable to show the individual expected payments.

Portfolio Statistics

A  chart/graph on one's lender page with the percentage of loans by country, sex, field, etc to show up on the Portfolio page as well, preferably with a way to display those statistics for each category of loan (fundraising, paying back, repaid, etc).

Ability to see a breakdown of what percentage of my active portfolio is subject to currency risk would like to see an actual count of loans to each country instead of only a percentage.

As Kiva accumulates historical data, it becomes less and less acceptable to report only totals since inception. Data should be reportable by periods. Lenders need, for example, to be able to display contributions made this year and to determine current values for field partner default rates and currency losses. Standardized periods (multiyear annual, last twelve months by month, year-to-date, past 30/90/365 days) are probably acceptable. Among the data that should be reportable by date range are …
--- My Portfolio (including My Loans, the Me and Average Kiva User values in My Impact, and the Me and Average Kiva User values in My Loan Statistics) and similar reports.
--- Statistics on the Field partner pages.


The lender needs to be able to see his own portfolio distribution in a more straightforward manner. His personal display should …
--- Reflect any date range limits in effect.
--- Allow reporting only on active loans and on outstanding balances. This is particularly important in that it would allow the lender to determine the dollar amount currently at risk for F/X losses.
--- Display dollar amounts, percentages by dollars lent, and percentages by number of loans.
--- Include additional breakdowns by region, partner, risk rating, currency risk, and any specified user-defined fields.
--- If provided on the Loans report, reflect only the loans displayed based on the date ranges in effect and the category (All, Fundraising, …) selected; otherwise, reflect the date ranges in effect and separately provide breakdowns for the active loans.

Misc

Exporting: The loan export file should include data on all fields at a level of detail comparable to that provided through the XML interface. Each field should be a separate column (although existing columns might be preserved so as not to break reports that lenders may have developed). Transaction exports should include data on losses and an indication of a loan’s termination and its final status. Changes to export formats should be announced in advance and sample data covering all cases should be provided in advance for download and testing.
 

Journals: I would also like it if there was a separate area where journal entries were listed.  Right now there is the "Some News for You" area, but if you are in a few groups, the group messages drown out the journal entries you receive.    I know this is not a priority, since we do get emails notifying us of journal entries, but it would be nice if there was a separate link, like for "My Messages," but where you can find a listing of all the loans you have made which have journal entries.

Ian's spreadsheet has numerous enhanced tools which should be incorporated into the website itself as much as is feasible.

The words are misleading.   When I log in, what I really am getting to is [should be labeled] "My Profile".  Then when I click on "Loans" I am finally getting to [what should be labeled] "My Portfolio."

 

[RichardF]

For some reason, the concept of "Kiva Risk" to Lenders has been excluded from this summary.  Please explain.

[Diane R]

For some reason, the concept of "Kiva Risk" to Lenders has been excluded from this summary.  Please explain.

Assuming you are referring to your post on "Kiva Risk" which you made in mid-October, you may have missed that the summary was sent to Gerard in mid-August.  Your suggestion was to add a statement to the "Risk and Due Diligence" page, not to enhance anything in the Portfolio Tools section.  Perhaps I missed something; if so, please describe the addendum you'd like forwarded to Gerard.

--Diane.

[RichardF]

Forgive my ignorance.  I was thinking information about risk was a portfolio tool.  I guess my request should have been, please direct me to the statement on how Kiva intends to disclose Kiva Risk.

[AccountAbility]

Wow!  That is some list.  If it were ever implemented in total, I would think it was Christmas.

Since it is so large, perhaps in your next liaison conversation with Gerard you might get some feedback about the efforts needed to implement each suggestion.  That way we might have some idea as to how to prioritize.  If a "nice to have" feature takes as much work as a "must have", prioritization becomes easier.

And since "core lenders" are allegedly a priority at Kiva, surely some significant movement can occur regarding this list.

Dan