Back and Better Positioned than Ever—CEO Scott Sanborn Interviews with Bloomberg
Published on: 9/5/2017. Revised on: 9/5/2017.
During the week of 2Q 2017 earnings in August, CEO Scott Sanborn was featured on Bloomberg TV and Bloomberg Radio, discussing the firm’s focus on growth over the last year and what the future holds for the company. After focusing on fine-tuning LendingClub’s internal processes in 2016, LendingClub is back to growing in 2017 with opportunities to tap new markets.
Below are some major takeaways from our 2Q earnings call and Scott’s Bloomberg appearances.
On the borrower side:
The macroeconomic backdrop: While macro trends are generally positive—low unemployment, low interest rates, low inflation and low oil prices with an increase in consumer confidence—credit card debt levels are near all-time highs. Today, there is more than $1 trillion in outstanding credit card debt in the U.S. Now more than ever, LendingClub needs to remain vigilant about helping people service their debt obligations. By facilitating a personal loan product, we can adjust loan rates along with floating credit card rates, so we’re able to maintain a healthy value proposition for borrowers along with the attractiveness of investing in our asset.
Borrowers are not alone: LendingClub borrowers are not alone in seeking a lower interest rate solution: credit card debt in the U.S. is at an all-time high1 and credit cards tend to carry high interest rates. Sixty to 70% of our customers are currently taking advantage of our personal loans to pay off credit cards which helps them to get on the path to financial success. Given LendingClub’s size relative to the size of the problem we are addressing, it leaves plenty of opportunity for us to grow. The numbers are just as compelling in auto.
LendingClub is here to help: Credit card debt is common and facing it is the first step toward financial health. People are so ashamed of debt, they’re more likely to admit to getting dumped, getting fired, and getting plastic surgery than credit card debt.2
On the investor side:
LendingClub is enabling more new investors access to an old asset: The continued broadening of LendingClub’s investor base is a sign of the maturation of the asset class. New ways to access the asset include a variety of funds available through partners in the investment ecosystem, as well as independent investing via investment advisers. Fifteen percent of our investor base still invests directly through the retail website, with the balance accessing the asset through other means.
Institutions want more: In Q2 2017, we had record high subscription from more than 100 institutional investors participating on the platform. Banks were 44% of our overall investor mix last quarter, attributed to LendingClub’s assets offering solid returns with a short duration.
Reaching new investors through securitization: LendingClub closed its first self-sponsored securitization deal in June, and introduced LendingClub to a whole new group of investors. More than 20 new investors engaged with LendingClub via the first deal, which demonstrated high demand for the asset.
In all, LendingClub did some self-reflection in 2016, re-invested in the foundation of the business, and put the right controls in place. We gave ourselves the necessary attention to improve our business model and goals, and posted our second-highest quarterly revenues in history in August 2017. We’re revving the engine again as we’re better positioned than ever to do what’s right by our investors and borrowers, and excited to continue expanding our opportunity set to new audiences via our auto and institutional products.