We believe that the use of technology can power financial inclusion and that innovative businesses see opportunities in market gaps. For LendingClub, that means addressing gaps in accessing affordable loans. Through data and technology, we’re able to provide access to competitive rates for borrowers and reach people that traditional brick and mortar lenders aren’t serving well.
In July 2017, researchers from the Federal Reserve published a study called “Fintech Lending: Financial Inclusion, Risk Pricing, and Alternative Information.” The study uses data made available by LendingClub at the request of the researchers and finds that FinTech is filling the credit gap and broadening financial services to underserved borrowers.
Some of the study’s key findings include:
- We’re filling the credit gap. “The empirical evidence presented so far is consistent with an argument that [companies] such as LendingClub* have played a role in filling the credit gap. LendingClub activities have been mainly in the areas in which there has been a decline in bank branches … More than 75 percent of newly originated loans in 2014 and 2015 were in the areas where bank branches declined in the local market.”1
- We’re providing access to competitive rates for borrowers. “The results indicate that given the same credit risk (i.e., for borrowers with the same expected delinquency rate), consumers would be able to obtain credit at a lower rate through LendingClub than through traditional credit card loans offered by banks.”2
- We’re improving the quality of credit decisioning. The use of data and cutting-edge credit models allow us to go beyond FICO with more accurate risk assessments and credit pricing. According to the study, “This has enhanced financial inclusion and allowed some borrowers to be assigned better loan ratings and receive lower priced credit.”3
We’re proud to deliver access to affordable credit to more Americans, especially those in underserved communities. To view the entire study, click here. All loans made by WebBank, member FDIC.
*References to LendingClub in the report appear as “The Lending Club” which we have changed here to reflect our brand identity.
1 Page 21-22
2 Page 33
3 Page 36