Lending Club may have hit a dead end

By May 8, 2017Bitcoin Business
Click here to view original web page at www.businessinsider.com
Lending Club Loan Originations
BI Intelligence

See Also

China is going after overseas fintechs

Japan looks to up its fintech game

THE US FINTECH REGULATION REPORT: How the US regulatory environment is holding back the fintech industry

This story was delivered to BI Intelligence "Fintech Briefing" subscribers. To learn more and subscribe, please click here.

Despite the aftermath of a governance scandal in early 2016, US alt lending giant Lending Club seemed to be on track for a slow but steady recovery at the end of the year.

Its results for Q1 2017, published on Thursday, however, indicate its improvement has stalled, and reveal few significant changes within the organization.

Overall performance is generally down, despite some minor bright spots. Origination volume slipped 1% quarter-over-quarter (QoQ) from $1.99 billion to $1.96 billion in Q1, marking a 29% year-over-year (YoY) decline from $2.75 billion in Q1 2016.

This is likely why net revenue also fell QoQ, by 5% from $130.5 million to $124.5 million in the period. Admittedly, losses narrowed from $32.3 million in Q4 2016 to $29.8 million in Q1, but only by 8%. Banks also apparently continued to regain their confidence in the company, now accounting for 40% of investment in the platform, up by 7% QoQ, and 6% YoY. While the declines in originations and net revenue were mild, so was the narrowing of losses; meaning that overall, performance was relatively stagnant.

Lending Club again stated that it's pursuing growth, but gave little evidence of how it's doing this. In the results call, CEO Scott Samborn pointed to continued investment in growth areas, including Lending Club's technology platform and its underwriting capabilities — but these are the most basic elements of its business, rather than new initiatives. This suggests that the company doesn't have a clear growth strategy or measurable goals. And while it's possible that it wants to return to the growth rates it saw in 2014, this would require more dramatic changes than we have so far seen. It's also worth noting that several of its peers have stopped chasing outsized growth, having decided it's unsustainable in the long run, which should give Lending Club food for thought.

John Heggestuen, director of research at BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on the payments ecosystem that drills into the industry to explain how a broad range of transactions are processed, including prepaid and store cards, as well as revealing which types of companies are in the best and worst position to capitalize on the latest industry trends.

Here are some key takeaways from the report:

  • 2016 will be a watershed year for the payments industry. Payments companies are improving security, expanding their mobile offerings, and building commerce capabilities that will give consumers a more compelling reason to make purchases using digital devices.
  • Payments is an extremely complex industry. To understand the next big digital opportunity lies, it's critical to understand how the traditional credit- and debit-processing chain works and what roles acquirers, processors, issuing banks, card networks, independent sales organizations, gateways, and software and hardware providers play.
  • Alternative technologies could disrupt the processing ecosystem. Devices ranging from refrigerators to smartwatches now feature payment capabilities, which will spur changes in consumer payment behaviors. Likewise, blockchain technology, the protocol that underlies Bitcoin, could one day change how consumer card payments are verified.

In full, the report:

  • Uncovers the key themes and trends affecting the payments industry in 2016 and beyond.
  • Gives a detailed description of the stakeholders involved in a payment transaction, along with hardware and software providers.
  • Offers diagrams and infographics explaining how card transactions are processed and which players are involved in each step.
  • Provides charts on our latest forecasts, key company growth, survey results, and more.
  • Analyzes the alternative technologies, including blockchain, which could further disrupt the ecosystem.

To get your copy of this invaluable guide, choose one of these options:

  1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
  2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the payments ecosystem.

Learn more:

Follow Fintech Briefing and never miss an update!

Get updates in your Facebook news feed.

Get updates in your inbox.

Privacy Policy

Get updates in your inbox

Subscribe to Fintech Briefing and never miss an update!

Privacy Policy

More: BI Intelligence BI Intelligence Content Marketing Fintech Lending Club

Leave a Reply