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
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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
1
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
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Q & A