Bondoras new bid allocation model

Marketplace lending is becoming a mainstream investment choice. However, as our investor base grows, so does the competition for loans.

Originally, if a loan received too many bids (overbid), Bondora would rank the bids based on size. Unfortunately, this method made it difficult for investors with smaller bids to get the loan. Some investors got their entire bid accepted while others were left out. Now, we’re changing the bid allocation model to be more inclusive to all bidders.

We will no longer rank the bids based on size. Instead, we will proportionally distribute loans among all investors trying to buy them. In short: All bidders will get a piece of the loan. This way everyone – big and small investors – will get access to the same loans.

Here’s an example of how the new system will work: A borrower requests a €1,000 loan. Several investors bid a total of €2,000. As a result, each investor who made a bid would have 50% of their bid accepted. This way each investor would be able to get access to all loans they want, albeit sometimes for much smaller amount they wanted.

When investors share concerns, we change and that’s why we’re implementing the new system.

This bid allocation model implementation will be automatic and requires no action from our investors. We will be removing investor ranking on 20th of April . However, please note that minimum investment size setting in the API and Portfolio Manager will become obsolete with this change.

Initially, there will be an absolute minimum investment size of €1 in order to facilitate investment level calculations using our current technology. Over the coming months we will however be rolling out a new infrastructure that allows fractionalizing loans to much smaller units making the proportional distribution even more precise.

You spoke, we listened.

5 responses to “New bid allocation model levels the playing field for investors”

  1. […] Bondora announced that the Bid Allocation behavior will change.  I just implemented a nice solution in order to avoid too many outbiddings like described in my second blog post. So I’m personally sad for the wasted time but let’s see how the new model will work. According to Bondora nothing needs to be adjusted and at the first glance I think this will work also for the Lending Robot. […]

  2. […] Bondora hat eine Änderung der Zuteilung bei Geboten bekanntgegeben. Gerade habe ich eine schöne Lösung implementiert, die verhindern soll, daß zu viele Gebote überboten werden. Dies habe ich in meinem zweiten Blog Beitrag beschrieben. Persönlich finde ich es schade um die unnütze Arbeitszeit, aber schauen wir mal wie sich das neue Verhalten auswirkt. Nach Bondoras Meinung muss nichts geändert werden und nach meiner ersten Einschätzung wird auch der Lending Robot weiterlaufen wie bisher. […]