Peach Finance founder and CEO Eddie Oistacher expects the company’s latest innovation, Self-Service Portfolio Migration, to become the apple in many a lender’s eye.
It’s the latest innovation from a company whose Adaptive Core technology supports any asset class with more than 200 configurations.
Oistacher spent three years leading Affirm’s core product team that built many lending pieces. They were first created in-house and then rebuilt as the company scaled.
He looked to vendors for servicing, but there were few options. Some were legacy vendors offering inflexible solutions that crimped innovation. So he decided to build a better, more flexible option with Peach Finance.
A lender’s key differentiators are its underwriting and fraud prevention processes, Oistacher explained. Let founders solve those issues and focus on servicing them post-origination.
Peach Finance build begins with basics
Oistacher incorporated some lessons he learned at Affirm when designing Peach Finance’s Adaptive Core technology. The process began by breaking down the loan process into its core parts. Over two years, the development team built processes for each component. Lenders take only the components they need for their unique systems.
They can also instruct each component on how to act. Using the example of an installment loan, one of 40 different types on Peach Finance, Oistacher said lenders could quickly program how interest accrues. Hence, it aligns with their product design, for example.
“You combine your product,” Oistacher said. “You’re telling each component how it behaves, and it works together to provide you with the functionality you need. Adaptive Core means every lender can go to each of those parts and tell us how they want the product to behave.”
How Peach Finance simplifies migrations
Peach Finance’s Loan Replay technology also simplifies integrations for lenders, he added. They replay each loan based on a subset of data to accrue daily interest, calculate interest and principal splits and determine loan status. This reduces the amount of data needing to be migrated and gives them access to loan histories in Peach Finance’s system.
Lenders also use the same API endpoints for migration that they’ll use to board new loans to Peach Finance. That allows them to essentially self-migrate with little training or manual data entry.
“On the high level, you just create the major events in the system,” Oistacher said. “Once we inject the major events in the system, we tell our system to migrate. But behind the scenes, what happened is the loan is being replayed from day one. So we just need from the lender the major event, but the rest of the events, like interest accrual, how things have been applied, are done by our system.”
This is important because large-volume lenders delay system modernization because of the amount of work involved and fears of security issues during data transfer, he added. Transfers are encrypted and SOC 1-, SOC 2-, and PCI DSS-compliant.
Balancing customer self-cure and agent assistance
Ultimately, lenders want borrowers to be self-curing, Oistacher said. Increased automation reduces pain points, leaving issues that actually need the human touch. Those automations can be programmed by the lender to include overdue reminders at prescribed points. Message tone can be changed throughout.
Oistacher said this is one area where Peach Finance took a different approach than many providers. Instead of acknowledging that calls could be made at specific points, they provide more options for the customer to solve the issue themselves (all with lender approval). Customers can lower monthly payments, split payments, or set up autopay depending on lender preference.
When first-party collections are needed, the system allows borrowers with specific issues to be assigned to the best-equipped agents to handle them. Those agents learn more quickly because all the tools they need are in one system instead of being split into multiple systems and providers.
The additional utility is provided by pre-integrated communications tools that can be deployed manually or via automation. Options are available for phone, email, SMS, two-way texting, chat, and physical letters. Letter templates can be provided, and the system accepts lender templates.
Peach Finance addresses compliance monitoring through Compliance Guard, which includes coded federal and state rules governing collections communications, including FDCPA, TCPA, UDAAP, SCRA, the US Bankruptcy Code, and applicable state analogs. Outbound collections communications are run through and approved by a rules engine. The system automatically blocks non-compliant communication attempts.
The 2023 game plan at Peach Finance is to invest in new asset classes, including secured ones. Make collections more robust yet flexible as market conditions lead to more of them.
“It’s tied with what’s going on in the market,” Oistacher said. “Many of our existing clients need more collections, and our future clients will also need them, given that a recession is coming. “Everyone will need to be prepared for collections specifically.”
Tony Zerucha is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.