Personal loans have surpassed credit card loans in recent years, but companies like LendingClub are making it possible for consumers to pay down their debts and save more. In this episode of The Yield, Peter Kerr, CFA, and Scott Sanborn, CEO of LendingClub, discuss reinventing the banking industry to help put millions of Americans on the path to financial success. LendingClub is the only full spectrum fintech marketplace bank at scale and has helped more than 3 million Americans save billions of dollars since it was founded in 2007.
[1:30] Scott’s journey from e-commerce into the digital banking space.
[7:53] The value of LendingClub within the challenger lending space.
[11:31] How can LendingClub offer such competitive rates?
[15:35] Regulatory considerations that impact the banking model.
[18:25] The impact of the pandemic on LendingClub and on consumer behavior.
[24:55] Which borrowers performed best during the pandemic, and what does the financial future hold for consumers?
[27:24] A pandemic playbook and other secrets of effective company management.
[31:26] Lessons learned from Scott’s advertising background and how he makes lending fun.
The average American has at least one credit card, and 45% of credit card owners don’t pay off their balance every month. That balance translates to a personal loan, and often comes with incredibly high interest rates. Enter personal loan companies like LendingClub. The aim of LendingClub is to help people consolidate and eliminate their debt while increasing their FICO score. They have tapped into the marketplace model to create competition for the loan asset, and have recently launched their own digital bank experience as well. They have moved beyond traditional lending into auto refinance, as well as helping consumers with their savings and spending.
But how is LendingClub able to offer such competitive rates, and why haven’t the incumbents been able to match those rates? According to Scott, there are both structural inefficiencies and unique characteristics of LendingClub that allow them to be the leading provider of unsecured loans in the United States. He covers the points of each and makes it clear — by capturing more revenue they are able to obtain more savings that can be passed back to the customer. And by partnering with a bank whose strengths filled in their gaps, LendingClub has quickly taken their business model to a new level of digital banking.
Even in the face of the pandemic, LendingClub continues to outperform the competition. Despite incredible market setbacks over the last 18 months, the personal loan asset class did really well, coming into the payment hierarchy even above credit cards. And within those personal loans, LendingClub performed exceptionally well as a result of the efforts they made to tighten underwriting servicing plans offered to their members during the most uncertain months. Those efforts combined with the reduced spending and increased savings behaviors of consumers has resulted in a positive outlook despite unprecedented Covid-related events. And with a high level of risk management, employee retention and high satisfaction with company culture, it’s clear that the pandemic hasn’t slowed LendingClub down at all.
LendingClub is passionate about helping people pay down their debt and save money on their loans, and the success they’ve experienced this far is a great indicator that they are going to continue innovating, creating new products and meeting the needs of their customers. There’s never been a better time to take advantage of all that innovative companies like LendingClub — and Yieldstreet — have to offer. To discover more about how you can take your financial ambition to the next level, visit www.yieldstreet.com today.
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