A bank is only expecting to make anywhere between three to four percent yield on any given loan pool in the current interest rate environment, and if you take 0.25 to 0.75 percent off the top, that’s a huge deal to the bank. That’s a financial hit since there’s already single-digit yields on these loan pools. That’s basically 0.25 to 0.75 percent of the trade. The broker will charge anywhere between 25 to 75 basis points (a unit of measure for interest rates and other finance percentages). The first problem is this process is very expensive. In today’s loan industry, I would go hire a human broker to pool up millions of dollars of agricultural loans in my bank, and then go sell that pool to another bank or financial institution. But the problem is, if I want to diversify out of agriculture the same way any other investor would, I have to now do something with that loan. So if I’m a commercial bank and I wanted to invest in agriculture, I would give a loan to a farmer, and then collect interest on that loan.
A bank tries to make money by issuing loans. A bank is an investor - they take their customers’ deposits and invest them to try to earn a return. Stackfolio is an online marketplace for loan trading powered by a data research platform. What problem is Stackfolio trying to solve? Thukral and Stackfolio’s CRO Omar Esposito talk about how Stackfolio is flipping the loan trade industry on its head and tackling four main problems banks have with their online marketplace and data research. We took the feedback from that first trade and we’ve improved our product significantly since then.” “We had the first trade, a $12M loan trade, with Brand Bank and another bank in Texas that’s about $2-3 billion in asset size,” says Thukral. “That was a huge validation of actually being able to do a $12M loan pool through our product.
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The platform offers tiers (with fees based on asset size) that provide tailored recommendations based on machine learning, full data access, digital 2-pager, transaction simulations, and more.įollowing a beta with Gwinnett County, GA-based small bank Brand Bank last summer and a public launch last December, Stackfolio has grown its client base to over 300 banks across 44 states, with almost $100M in loans listed on their marketplace. Stackfolio provides a full suite of tools and analytics to help banks, small to large, make more effective trading decisions on a national level.
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Now, this first-time founder has been backed by serial entrepreneurs Allen Nance and Paul Judge of TechSquare Labs to build an online marketplace to optimize loan trading. Pavleen Thukral, a Georgia Tech Computer Science alumnus formerly of Bloomberg, saw a gap in the way loan trading operates and the lack of liquidity that most lending institutions experience. Many financial institutions are behind the times when it comes to tech-enabling their internal processes. The sale of loans is done by human brokers with a limited network in a process that typically takes 3-9 months - a timeline that makes it difficult to plan within quarters and limits loan growth.
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