With 18 days to go until we reach the end of our 5% Cash Bonus program, we want to update everyone on our progress:
• Our growth has been fantastic! We have reached $6MM in issued loans, and have over $3MM of loans in funding today, so our loan volume is growing extremely well
• Our lender base is growing as well – the number of lenders has doubled in the last month alone
• Our next system release (due in the next few days) also offers a great new set of lender tools that makes lending and account management even easier and incorporates feedback from many in our lending community
With all of the growth in loans and loan requests, we want to reach out as widely as possible to current and now prospective lenders with our special offer: Lending Club will give a 5% cash bonus to all lenders who lend $5,000 or more between December 14, 2007 and February 3, 2008. This bonus can be used to lend or can be withdrawn to your linked checking account. There are no special sign-ups needed to participate in this program.
Click here to read the program details.
Better Lending. Together
We are focused on making our person-to-person lending site as simple and reliable as possible. As Barron's wrote this weekend, Lending Club and other P2P lending sites strive to be "highly automated, remarkably transparent, and employ Web 2.0-era ways of matching borrowers to lenders." To that end, we are releasing a series of improved and clarified pages starting with our statistics and lender ranking pages.
The intent of these pages was to provide a measure of current performance, similar to what you get on an online trading Website like Etrade or Schwab. Feedback from several of our lenders indicate that the ROI section was in some cases interpreted as a projection of future performance. With the amount of data we have gathered other the last 6 months, we cannot offer projections of future performance in a meaningful and reliable way. Faced with the risk that some current and potential lenders would use the ROI section as projections, we took that entire section down and will keep it that way until we have sufficient data to make reliable projections of future ROI. We have put up a new statistics page and lender rankings page to clarify the statistics and make our help page more helpful. This is an intermediary step that fixes a couple of statistical issues and clarifies the help file content.
We will release another version of the statistics page in the next few weeks that shows more details, including late loans as percentage of loans issued for more than 45 days and a breakdown of late loans by age. Thank you to all for your continued input and suggestions. We look forward to hearing from you on these improvements.
The average return on all loan portfolios created by Lending Club lenders since the opening of our public Beta on Facebook on May 24 has been steadily moving up. As you can see from our home page, the average portfolio yield is currently 12.10%. What is the reason for the steady increase?
We believe that this trend reflects good news for everyone in the Lending Club community. Our interest rates are driven by credit grade. Credit grade is driven by multiple factors including credit score and loan amount. Interest rates vary with the size of the requested loan, which is done to reflect the difference in risk between a small payment and a larger one (assuming an equal pre-loan Debt-to-Income ratio)
Lending Club's average loan size has steadily increased - from under $5,000 in June to about $6,000 now, which has moved many loans into slightly higher interest rate ranges based on the loan amount modifiers. This is good for borrowers because they are getting larger loan amounts approved (and fulfilled). Over 90% of our loan listings are funded and issued. For lenders, the yield on new portfolios is moving higher.
Long term, where is this going to go? It remains to be seen where the average return will end up. Our interest rates will move over time with the market and we are making adjustments to the rate modifiers as we get more data in. We expect that post-fee, post-default yields on portfolios will remain above 11%, making an investment in person-to-person loans on Lending Club a very compelling alternative to putting money into bonds and stocks.
Lending Club was privileged to present this week at Finovate, a one-day conference focused on innovative companies that are creating the next generation of financial services. Kudos to Jim Bruene and NetBanker for a meeting that let each company demonstrate its offering to an overflow audience of press, bloggers, bankers, techies, and beyond.
At a high level, there were two kinds of companies at the conference: Web 2.0 and Mobile. The mobile technology available to banks and consumers is becoming more and more impressive with time – allowing people to manage everyday finances directly from their mobile devices. Someday, we will all be paying bills with our cell phones.
The Web 2.0 lineup was great as well. The participants included loan companies, personal finance companies, and even a virtual collection agency. Every company had a good presentation – most all of them were able to show the new and improved experience that financial services customers can have thanks to recent innovations.
We had the pleasure of talking with executives from all across the industry about possible deals and new ways to apply our technology and services. We spoke with bloggers and reporters, who put up a video blog and an article about Finovate.
I am particularly proud of our 7-minute demonstration of Lending Club where John Donovan explained our company's approach and market strategy while I lent $500 to 20 different borrowers using our leading edge LendingMatch™ technology. Each of the borrowers got great rates, the audience response to our p2p lending platform was excellent, and the overwhelming interest after the demonstration was great to see. We think making loans to people at great rates using our p2p lending approach will be a big and growing part of financial services going forward.
Thanks again to Finovate and congratulations to all of our co-presenters on moving financial services into the future.
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