It is hard to believe it has been 10 years since Lending Club started operations. Lending Club launched a marketing campaign and website celebrating their 10-year anniversary and outlining the major milestones for the company. What started out as a Facebook application has morphed into one of the largest online consumer lenders in the US. Despite the news of last year and other challenges the industry has faced I believe Lending Club’s story is still one of success.
Coming out of the recession providing unsecured consumer loans was the last thing on the minds of big banks who have only recently began to take note of bringing lending online. Now an entire ecosystem has developed and we are beginning to see a more mature industry. Their success was far from certain. In 2008, Lending Club entered a quiet period where it worked with the SEC to come up with a path to move forward. Coming out of the quiet period Lending Club began to offer its loans as securities and remains one of the few platforms open to retail investors.
The company had its first $10 million origination month in 2010. The company now originates nearly $2 billion per quarter. To put the growth into perspective, the company reviewed on average four loans per day in 2007 and it took two weeks to facilitate their first $100,000 in loans. The company now reviews around 1,700 loans daily and facilitates $100,000 in loans every six-and-a-half minutes. Originations now top $26 billion.
Other major milestones include the IPO in December of 2014 as well as product expansions into small business loans and more recently, auto refinance. As of Q1 2017 the company has successfully brought a significant amount of banks on the platform which now represent 40% of loan funding. The first banks began investing in 2013.
Looking Forward
The very banks that did not pursue lending to consumers when Lending Club first started are now entering the space. Certainly Lending Club will face competition from traditional players as we’ve started to see recently but I believe Lending Club is a differentiated lender. Lending Club is a platform others can leverage and they have successfully partnered with banks both on the funding side as well as the origination side. This is a major key to Lending Club’s success going forward.
In some ways it’s amazing to see how far the industry has come from the early days when getting a loan online simply wasn’t possible. However, I am most excited to see what happens over the next 10 years. If you’ve attended any of our LendIt events over the past few years it’s clear just how vibrant an industry this has become. Lending Club is a big part of the industry’s success, but there are hundreds of other companies innovating as well. Lending Club paved the way for the future of lending and I congratulate them on their 10 years and look forward to seeing what the next 10 years has in store.
