P2P Lender Prosper Announces Plans for HELOC Product
When it comes to being a FinTech “disruptor,” stagnation can easily mean death. Because of this, companies in the business of revolutionizing finance and technology are constantly looking for new markets to enter and ways to improve their product. In some cases — as we recently saw with OnDeck spinning off its platform — this could also mean leveraging your strengths to help improve how other companies operate. On that note, today the peer to peer lender Prosper announced plans to introduce a home equity line of credit (HELOC) product sometime in 2019.
In a press release announcing plans for a digital HELOC platform, Prosper noted that the process of applying for a home equity line of credit has traditionally been a lengthy one. Moreover demand for HELOCs are on the rise as home values in many markets continue to increase. Thus the company intends to unveil a platform where borrowers can complete an online application in mere minutes and receive pre-approval offers instantaneously. Prosper also says that HELOCs will have no origination fee and the rates will be the same as if customers went directly to the banks.
Further explaining the benefits of what his company is building, Prosper Marketplace CEO David Kimball said in a statement. “We are taking advantage of our expertise in consumer credit and personal loans to build a product that removes the complexity and time-consuming barriers in applying for a HELOC.” He went on to say, “For many of our customers, a HELOC could be a better choice for their financial needs and we’re thrilled to be working with our bank partners to render the traditional process obsolete with a new digital HELOC process that is simple, fast and painless.” As part of their press release, Prosper also seemed to pitch their product to potential partners, stating that banks could “significantly grow their HELOC footprint by gaining access to Prosper’s national customer base, proprietary technology and marketing expertise.”
This latest move on Prosper’s part does sound like a bit of a departure from their peer to peer beginnings. Since launching in 2005 the company has facilitated more than $13 billion in personal loans via their P2P platform that matches borrowers and investors. Unfortunately for Prosper, they’ve long been overshadowed by Lending Club — who, as of September of this year, had facilitated $41 billion in loans. With that in mind, this pivot to a HELOC platform backed by banks seems like a smart move as it relieves a pain point for customers and expands Prosper’s reach while still keeping them firmly in their FinTech wheelhouse.
While Prosper’s HELOC product isn’t expected to launch until next year, you can sign up for updates on their website.