Scott Sanborn discussed the current market environment for online lending in his speech at LendIt USA comparing the industry to the growth of online retail and using Amazon as an example for how businesses can dramatically change and adapt to provide the best services for market needs; online lenders will have to be strategic in identifying market opportunities, building on their proprietary systems and partnering with other companies; Ash Gupta from American Express also noted at the conference the challenges and opportunities presented to online lending through the use of big data; the growing amount of data sourced by the industry has the potential to improve credit models and fraud prevention while also providing broader capabilities through machine learning technology. Source
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A federal district court in the Southern District of New York has ordered the Bethune v. Lending Club Corporation, et al. case to proceed to arbitration; plaintiffs argue that Lending Club loans were in violation of state usury laws despite their association with WebBank; while the case is still pending, the court has said it will be decided through arbitration due to clauses in place by Lending Club. Source
Shares in the online lender have sunk almost 20 percent on news that they will lower their full year earnings forecast; the company also announced that they are limiting lending to lower grade borrowers as they continue to tighten their credit standards; while scandal has hurt the company, they have been tightening their credit standards for close to two years as they continue to adjust models. Source.
While hosting their first investor day the online lender again cut guidance for profits and shares fell to record lows; “The last 18 months have been among the most challenging of my career, but my conviction has never wavered: consumer credit is a data problem that a technology-driven marketplace is well positioned to solve,” CEO Scott Sanborn said at the investor day; Lending Club has had is share of issues and new entrants like Marcus have begun to crowd the market; not all investors are put off by the news, Chinese investor Shanda said he was keeping the faith in the lender as they recently made a big investment. Source.
John MacIlwaine has taken a new role as chief technology officer at Braintree; Braintree is a mobile payments technology company owned by PayPal; MacIlwaine submitted his resignation at Lending Club in December. Source
Lending Club files an 8K for a $200mn warehouse funding agreement; JPMorgan Chase was the administrative agent and Wilmington Trust was the collateral trustee; the revolving credit facility will be with certain lenders not yet announced; the move is another step in the funding sources diversification direction the company discussed late last year. Source.
Lending Club has hired Santiago Suarez, JPMorgan's head of new technologies; he will join Lending Club as the firm's head of strategy and mergers and acquisitions; at JPMorgan, Suarez was involved with testing blockchain and machine learning; he also worked in the bank's corporate strategy group, focused on managing top strategy issues for the bank. Source