Here at Stackfolio, we are tackling a BIG capital markets problem. We are taking the manual, inefficient, and human–brokered loan trading market online. But why tackle this capital markets issue by building a technology company that partners with bankers?
At the start
It took a meeting in early 2015 with Bartow Morgan, the CEO of The Brand Banking Company (since merged with Renasant Bank) to discover and truly understand this massive, but inefficient market. Over 20,000 institutions participated in an almost $1 trillion annually transacted market, primarily OVER THE PHONE. This reality left bankers facing two major problems.
First, Bartow, like many bankers, faced a problem that almost every financial institution faces in some shape or another: liquidity. As he noted then, “For Brand, when we originate large numbers of loans in a given month, our machinery can stop if we don’t find proper exit liquidity on those loans.”
Second, the lack of efficiency in trading…
As engineers that grew up in the age of the internet, we were awestruck.
The market was almost 100% human brokered and operated as a limited circle of contacts that sourced liquidity by calling up bankers to trade. And the vehicle for these transactions was a phone and snail-mail. The most state of the art operation that we could find was sending a physical hard drive of loan docs via FedEx.
Our team knew there was no way that this market wouldn’t move online. So we got busy building.
What we built
In December of 2016, Stackfolio launched publicly to the market. The response was better than we could have hoped for. In just under a year, we had almost 500 institutions sign on to the Stackfolio platform, had almost $1 billion in listings, and were on our way to creating true liquidity. We raised a round of capital around this growth at the end of 2017 and started to ramp up as a company. We’re pretty proud of where we landed.
Today, we have nearly 800 institutions from all 50 states and almost $3 billion of listings on our marketplace, with loans listed across every major asset category and across every geography.
“… $3 Billion of listings on our marketplace, nearly 800 institutions from all 50 states…”
That growth led to a problem; our favorite kind of problem. Our Marketplace product wasn’t keeping up with the growth. We were constantly getting support questions from our customers being overwhelmed with the number of listings they were seeing and that searching through them wasn’t easy. We were very grateful to have this problem, but we had to fix it.
The team went back to the whiteboard because it didn’t view this as a simple matter of creating more filters or separating things into categories. Stackfolio is not an e-commerce platform for mugs – not that that’s not a great business! We’re an online marketplace for very complicated financial asset transactions.
There is a lot of nuance in the loan trading business with our customers facing unique challenges, such as qualifying credit underwriting guides, building unique investment strategies around borrower information, managing different investment timelines, and balancing regulatory requirements. Stackfolio has and continues to help financial institutions with these challenges.
For example, many institutions come to the Marketplace to help meet Community Reinvestment Act (CRA) lending requirements. Many come to strategically fill gaps in their loan growth/origination goals. While others utilize Stackfolio to appease regulators when they hit liquidity constrains like their CRE/Cap thresholds.
Our institutional buy side clients have their own unique struggles as well. There is massive pressure for asset class diversification, while at the same time they are being hit with fee compression from all sides. Stackfolio is helping solve for this.
The New Marketplace
However, we just weren’t doing the best we could for our clients to be able to find and explore these opportunities.
So we’ve built a system for putting the right opportunities in front of the right institutions, at the right time. And we’ve understood that we have to combine a great Marketplace product, extremely integrated customer service, data, and an obsession on experience and speed.
You can now find what you’re looking for on Stackfolio in seconds. We put the most important Stip criteria right at your fingertips. Every asset and demand is geographically qualified. The most important portfolio level information is not only available up front, but there is also no pay wall or sign up wall in front of it. The experience is completely optimized on all devices.
“… there is also no pay wall or sign up wall in front of it.”
And we’re not going to stop there. We’re building tools to increase historical pricing transparency, a full suite of due diligence products, and a communication infrastructure that will make trading more and more seamless.
As we continue our journey here at Stackfolio, I have only one request: please enjoy our new and provide your feedback at the bottom right of every page of the product, to a real team member.