ondeck - data driven nyc (27)
DESCRIPTION
OnDeck CEO and Data Analytics Manager, Noah Breslow and Abhra Mitra, presented at May's edition of Data Driven NYC, which focused on p2p lending.TRANSCRIPT
Noah Breslow | CEO Abhra Mitra | Data Analytics Manager
May 20, 2014
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© Copyright 2013 OnDeck. All rights reserved.
PRESENTERS AT MAY’S EDITION OF DATA DRIVEN INCLUDED:
JEFF STEWART: @URGENTSPEED @LENDDOFRIENDNAVEEN AGNIHOTRI: @NAVAGNI @LENDDOFRIENDNOAH BRESLOW: @NOAHBRESLOW @ONDECKCAPITALABHRA MITRA:
@ONDECKCAPITALJAMES GUTIERREZ: INSIKTRENAUD LAPLANCHE:
@LENDINGCLUB
#DataDrivenNYC
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Agenda
The Small Business Lending Gap
How Data and Technology are Enabling Innovation
Case Study
Q&A
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99.7%of all businesses are
small businesses
Meet Ben, owner of Waterfront Wines
in Brooklyn, NY, and 3-time OnDeck
customer
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Large and Underserved Addressable Market
(1) SBA 2012 Small Business Lending Study - # of Non-real estate small business loans outstanding for depository lenders as of June 2012(2) Oliver Wyman, How “New-Form Lending” Will Shape Banks’ Small Business Strategies, 2013
Bank $100k or less
Bank$100-250K
Unmet Demand
Total Market Opportunity
Sub-$250K U.S. Small Business Loan Demand
$100B
$120B
$46B
$266B
1 1 2
<$0.5B
(current outstandings)
The Small Business Lending Gap
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Disrupting Traditional Financial Services
Lending is one of the last industries to be transformed…
Retail
Travel
Real Estate
Payments
Lending
Brick and mortar stores
Traditional travel agencies
Brokers & classified ads
Checks, cash, & high card fees
Retail banks and credit card companies
THEN NOW
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Proven Platform for “On-Demand” Capital
Small Businesses
Data Aggregation
Real-Time Monitoring
OnDeck. com
OnDeck API
Loan Sales with
Asset Visibility
Origination Platform
Servicing Platform
Data Sources
Customer Database
Daily Collections
(ACH)
Proprietary Credit Model
1st online-based, daily collection lending platform
Over 240,000 loan applications processed
Over 3,500,000 daily payments collected
Millions of variables in small business database
Over $400M of Commitments
Nearly 20K Borrowers Served
Turn-key Capital SolutionsCapital Sources
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The Small Business Digital Footprint
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Data + Technology = The OnDeck ScoreTM
Payment History
Amount Owed
Credit His-tory
New Credit
Types Credit Used
Personal Credit Score
Financial Info Non-
Finan-cial Info
Trade Info
Public & Social
Business Attributes
Cash Flow
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Who to Target vs. Who to Approve?
10 years in business
~ $1 million in annual revenues
500-800 FICO
<$75 avg. transaction size
One of 700 qualifying industries
Customer Profile
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At OnDeck We Are Always Looking for More Data to Improve Model Performance
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Version 1 Version 2 Version 3
60% 65% 85% 95%
Version 4
More loan history to model on
More data points on each loan
Result: Better model performance AND coverage
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For this we are building a data aggregation & learning platform
Data Aggregation
Record Linkage
Machine Learning
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Record Linkage – Similarity Weighted Across Different Dimensions
Mag’s Plumbing, 1400 Herr Road, Helena MT406-100-1000
Mags Plumbing Inc,1400 Herr Rd406-100-1000
Mag’s Plmbing,1400 Her Rd
406-100-1000
Mag’s Plumbing,234 Name Road406-100-1000
Mag’s Plumbing,400 New Road406-000-0000
Data entry typoBusiness Record Alternate Address ????????
Mag’s Plumbing,400 New Road406-000-0000
Mag’s Plumbing1400 Herr Road212-100-1000
Mechanical Turk + Intuition
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This Allows Different Data Sources to Vote in a Model
Pizza
Food & Dining
Restaurant
NAICS 722511
Full Service Restaurant
Funeral Directors
Funeral Homes
Easy: Lots of data, and words that clearly point to restaurants
Harder: Very few data points, but the model can still make a prediction
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Key Takeaways
Record linkage allows us to acquire more data points/sources
on every business
This allows multiple data sources to “vote” on the final answer
That leads to better models and better coverage
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Summary
OnDeck was founded in 2007 to
address an underserved market:
small businesses
Technology and big data are
changing the lending game and
driving efficiency
Q & A