Prosper released their Automated Quick Invest (AQI) tool back in October. It worked great for a while – it was a totally hands off way for investors to find new loans and invest in them without ever having to login. But as many investors have shared here in the comments on this blog, it started to have some problems a few weeks ago.
What was happening is Worth-Blanket2, Prosper’s largest investor, was snapping up entire loans as soon as they were available on the platform. Sometimes these loans were only available for literally 20 seconds before they were fully funded by Worth-Blanket2.
You see, Worth-Blanket2 was using the API to do their investing and this API allowed investing in a new loan every second. So Worth-Blanket2 could invest in 60 loans in the first 60 seconds they were available. Considering that most of the time there were less than 60 loans added to the platform at a time, they essentially blocked out the retail investor from many loans.
This would not have been a problem except for the fact that investing through the API superseded investing through AQI. This meant that anyone using the API (mainly institutional investors and it-savvy individual investors) was able to invest their funds before any individual investors like myself.
No More Advantage to the Institutional Prosper Investor
The tweaks that were done last week ensured the advantages that API investors had has now gone away. Instead of being able to place an investment every second, these investors can now only place a bid every 90 seconds. Here is how it was explained to me in an email from Prosper:
The objective of this series of tweaks was to make the API and AQI essentially equal in average time to bid. The average API bid was being placed much faster than the average AQI, which was a problem once we became listing constrained. Moving the API time between bids was a fast way to address the speed issue, which we think we have now approximated. At 90 seconds, API’s are taking about 15-20 minutes to complete whereas before the change they were complete in under a minute. The AQI’s are also now at about 15-20 minutes (after speeding up that process though these tweaks) although it is possible to have a stray AQI take longer. We have another tech improvement that will make the AQI’s faster still (too early to estimate a speed ratio improvement yet), but that is a few weeks away. At that time, we’ll also reduce the API time between bids to get back to API/AQI parity.
Separately we are working on making the overall AQI’s faster verses manual bids and to place all bids in the same process. Today, AQI’s work on a round robin process and execute separate from the API process. Putting all three bid sources in a common bid process is the longer term solution to the issue. Until then, we’ll continue to watch the AQI versus API bid speeds and may adjust the time between bids accordingly.
More Loans Hitting My Automated Quick Invest Now
I am very pleased that Prosper took notice of this problem and addressed it very quickly. My experience, while anecdotal, has been positive. After investing in just three loans through AQI in the first half of February, in the last six days I have invested in nine loans with no change in my investing criteria. It is not quite back to where it was in October and November last year but it is certainly an improvement.
What about other Prosper investors? Have you seen an uptick in your AQI investments in the last week. I am interested to know how it is going for you.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.