Subscribe to Pro or Enterprise plans to unlock this feature.
Become a smarter investor today.
Become a smarter investor today.
This statistic highlights Upstart Holdings’ Conversion Rate, on a quarterly basis from Q4 2019 onwards.
The company defines Conversion Rate as:
By evaluating this statistic, the firm can observe the impact of enhancing the efficiency of their borrower funnel on overall growth.
|Period||Q3 2020||Q2 2021||Q3 2021|
|Conversion Rate (%)||15.2||24.4||23.0|
For more than eight years, the firm has been developing and improving AI models, which have resulted in direct growth and profitability. Aside from the benefits gained from an ever-increasing supply of training data, their machine learning team keeps their modeling methodologies up to date on a regular basis. Over time, the company’s conversion rate has improved as a result of model and technological upgrades.
Furthermore, bank partners have been retaining loans for their own client base and balance sheet. In the year ending December 31, 2020, the originator bank held around 21% of Upstart-powered loans, while institutional investors purchased about 77% of Upstart-powered loans through loan financing programs.
Banks may finance loans at lower rates in general because the cost of funds available from their deposit base is lower than the cost of funds available in the broader institutional investment markets. As a result, loans kept by the originator bank typically have lower interest rates for borrowers, resulting in higher conversion rates and quicker platform development.
Loan unit economics have improved over time as a result of greater automation and continuous improvements to the company’s Conversion Rate achieved through increasingly sophisticated risk models and altering channel mix. Furthermore, in the near term, bank-sourced loans might be a key driver of volume growth; to the extent that we can raise the number of loans sourced directly through our bank partners, our contribution margin would benefit.
These two are essential parts of Upstart’s ecosystem since they fund loans and bring in new customers. Offers offered to borrowers will often improve when they embrace our technology and fund an increasing proportion of our platform transactions, resulting in higher conversion rates and quicker growth for our platform.
Financial performance and associated measures, such as consumer demand for loans, conversion rates, and the interest rates that bank partners and institutional investors are prepared to pay, can be affected by economic cycles. The volume of consumer loans, including the volume transacted on their own platform, is expected to decline in a future downturn.
Historically, the Conversion Rate has benefited from technological advancements that have improved risk rating accuracy and streamlined the verification process, as well as the addition of bank partners that have made offerings more competitive. The capacity of the organization to construct AI models, the percentage of loans that are completely automated, and the mix of marketing channels used at any one time will all play a part in enhancing the Conversion Rate in the future.
However, the success of Upstart-powered loans during a downturn, such as the one seen during the COVID-19 epidemic, will be critical in convincing banks and institutional investors that their AI models are sound. If the firm can continue to show that Upstart-powered loans are more resilient than conventional consumer lending over future macroeconomic cycles, it will enhance its competitive position as we emerge from such downturns and boost conversion rates.
Upstart Holdings, Inc. runs an artificial intelligence (AI) lending platform that is hosted in the cloud. The firm’s platform collects consumer loan demand and connects it to the firm’s network of AI-enabled bank partners. Individuals, banks, and institutional investors are linked through a single AI lending platform. Upstart Holdings, Inc. was formed in 2012 and is situated in San Mateo, California.
Did you like Upstart Holdings’ Conversion Rate statistic?
Access more such KPI data points and segment financials on thousands of US stocks, with Business Quant.
You can get started here.
Always know what you’ll pay. No hidden costs or surprises.
* Billed annually, local taxes extra.
* Local taxes extra.