21 Jul What is a Pingtree for Loans?
In our 21st century of ever-advancing technological innovation, the advent of the pingtree will have gone largely unnoticed by the vast majority of the general public.
Unless they happen to work in finance in general and loans in particular there’s no real need or reason to have heard of them. Here at Badger Loans we’d never heard of them either until we came to work in the consumer credit industry.
What’s a Pingtree Grandad?
So what actually is a pingtree? It’s a piece of software which contains every lender on a broker’s panel with all their lending criteria and a whole host of complex algorithms used to decide which lender gets which customer.
Pingtrees have a reputation in some quarters for ‘targeting the most vulnerable and paying the highest commissions first before any other criteria’. Plain wrong.
Even if we wanted to put the highest commission payers at the top of the tree so they get first dibs, we couldn’t. There’s something called ‘treating your customers fairly’ which was originally devised by the previous regulator the FSA and taken up by the current version, the FCA and it’s designed to counteract this very type of approach.
Rightly so and in practice it means that the algorithms sort through a combination of lowest interest rates, likelihood to lend and commissions payable before deciding who to show your application to first. It’s basically out of our hands.
How does a Pingtree work?
The pingtree makes use of existing technology to give you the customer the ability to put yourself in front of every lender on our panel of lenders who include most of the High Street lenders on page 1 of Google and then some besides. And it can do this without affecting your credit file because we use what’s called a ‘soft search’ which leaves no trace.
Each lender can assess your credit worthiness (in their opinion) and decide whether they want to take this a step further. That stage then becomes the pre-lending phase where possibly proof of income, a phone call to check identity, self-same identity documents will need producing until finally a decision is reached and you get the money in your bank account.
This whole process which used to take anything up to 2 weeks now happens in the almost blink of an eye. A long blink of an eye as it normally takes a day. It can be done in an hour but that’s rare even with the tech we now have at our disposal.
Background to Credit Broking for Badger Loans
Having transitioned from the Home Credit business to Credit Broking in 2017 we had to decide how best to go about setting up a credit brokerage. We were in the mortgage business back in the 90s at the very beginning of the internet and naturally assumed the business model would be fairly similar but far slicker due to said ongoing tech advances happening at a rate of knots. Back then our business came via estate agency offices who would give us ‘leads’ in the form of interested viewers/vendors who were willing to speak to us about possibly arranging their finance.
An estate agency negotiator would get their permission for the call and we would do our best to get them in the office to arrange their mortgage. Whatever fee or commission resulted from the mortgage (or more usually the insurance sold alongside it) would then be split between us and the agent.
Translated over to a credit broker and a newspaper ad or similar campaign would generate people ringing your phone who you could then try to match up with a loan by knowing all the lenders lending criteria, having good contacts at the lenders who you could ring and place a loan or mortgage with.
Basically it was human to human contact all the way round. Except for at the beginning of the 90s the internet was just taking off and as early adopters we got in quick and started using a system called ‘Mortgage Link’ which would download all the best deals and rates from every lender in the country every day.
It was a revelation and it meant no more 30-50 letters arriving daily with changing lending criteria in it. Now it was all done in a couple of seconds over a dial-up modem (make that hours!) and we could throw away our lending manual and save some trees in the process, wonderful.
The important things to note above are the human to human contact and knowing our products as well as the computer knew them. We’ll come back to those points soon.
As we venture further down the technological road of ever-quicker search results leading to faster applications and quicker results you may have noticed a proliferation of names for loans? You can supposedly now get a ‘bad credit loan’, a ‘payday loan’, a ‘short term loan’ or an ‘instalment loan’, a ‘CCJ loan’ or an ‘emergency cash loan’. Then there’s ‘guarantor loans’ and the frequently seen alongside it ‘no guarantor loans’.
Or maybe you’d prefer a good old fashioned ‘personal loan’ instead? Guess what? All those loan names don’t really exist. Behind the counter at your local bank are no products with any of those names on them because the truth of the matter is there are only two types of unsecured lending and those are Personal Loans and Guarantor Loans. Everything else is purely for both clarification and marketing, with the emphasis on marketing. To put it simply – the pingtree knows only loans.
Credit Broking in the 21st Century
We return to our story of setting up Badger Loans. Having become disillusioned with the very nature of the Home Credit business and wanting to take no willing part in another human being’s misery we decided credit broking might be a better way to earn a living. It shouldn’t be too different from mortgage broking in the 90s right? Wrong.
The first inkling things may be a whole lot different was the first time we heard mention of the word ‘pingtree’. What’s that you say? Well, it goes like this – if we could have made up the best way possible to run a profitable business without having to answer a constantly ringing phone then take down the customer details while trying to ascertain the truth is being told and there’s nothing nasty about to appear on their credit search while also knowing every piece of lending criteria from nearly every lender in the country who could look at each of your customers in a couple of seconds flat then make a lending decision based on that quick look then this was it.
It appeared at first glance that if you could get this business set up the right way, once your site had arrived on page 1 of Google for some tasty keywords like ‘payday loans’ or ‘personal loans’ all one would have to do is keep an eye on your ever increasing bank account balance and stay on page 1.
To a certain degree that’s true but what we didn’t take full account of was just how intense the competition is to get to page 1 of any search engine for the big playing keywords (keywords are the words or phrases a customer will input into a search engine when looking for a particular product to buy) nor were we fully aware of just how much of the day to day business of credit broking technology had replaced.
In our case, pretty much all of it. It was therefore a major surprise to discover we weren’t so much credit brokers as internet marketers! It turned out we didn’t need to know any of the products our panel of lenders were supplying because we weren’t going to be speaking or writing to anyone to give them any advice even though we are licensed to do so and have had to go through and pay for the whole licensing process with the FCA.
Nor would we need to know anyone in the lending industry outside of the people who own and administer the pingtree because the pingtree knows everyone and the pingtree knows every product from every lender.
The result of the above advances in technology meant that our day to day focus was in trying to get the site as high up the rankings as possible for as many relevant keywords as could be imagined. It meant we could leave product knowledge and industry insider knowledge to an algorithm which is updated daily and which knows the business inside out.
So that should be it, everything in the lending garden is rosy, the customer gets their loan at the best rate from the most relevant lender and providing we’ve got Badger Loans to page 1 of a major search engine for a keyword that produces lots of hits and therefore lots of customers. Yes and no. Nothing is perfect, algorithms are input by humans, mistakes get made and pork pies get told on both sides of the fence but it’s the best system we’ve got right now and it makes best use of the available technology. With that said, we’ll be sticking with the pingtree for the immediate future.
Good luck with your hunt for the right loan for you.