In 2012, Lending Club, one of the pioneers of peer to peer lending investment recorded a historical growth by reaching a $1 billion mark in loans issued. Since the start of the lending platform in 2007, there have been ups and downs but amidst these challenges, Lending Club has managed to grow strongly. Its growth had reached as high as 300 percent for the past 12 months as at the beginning of 2013. Such growth shows that there is plenty of cash available to lend and that investors are seeking for ways in which they can put in their cash for returns.
The model of investment put forward by Prosper and Lending Club seems to have succeeded and now it is only a matter of time before this lending business becomes a mainstream activity in the nation. The growth seems to suggest that this might only be the initial steps for a longer journey of the decentralization of the country’s financial sector. Similar models which began in the same way are such as PayPal and today, this online money transfer has changed the lives of many people in the world.
Peer to peer lending is expected to grow to be global financial solutions. In 2013, person to person loans by Lending Club are expected to hit a %1.7 billion. From the firm’s commendable growth of more than 90,000 loans totaling to more than $1 billion, it was a good indication that this form of lending is now a mature technical development that can be duplicated for nation’s growth.
Lending Club has managed to alleviate some of the stumbles and over excitements which were witnessed from the word go when the business was launched in 2007. Passing through an expensive and cost-consuming scrutiny process by the securities and exchange commission-SEC, the company has stood against all odds and has demonstrated that the business model can work.
According to the CEO and co-found of Lending Club, Renaud Laplanche, an influencing personality in the financial world today, the company is putting in place many proprietary factors that help judge an applicant’s creditworthiness before the loans can be granted and this is coupled with FICO score rating check. Lending Club could be signalling a paradigm shift on how the consumer perceives lending because it seems that the consumer is walking away from the financial institutions and wishing to borrow from fellow consumer who is an investor.
The Lending Club business may be signalling the same change in consumer behaviour which was witnessed when the once obscure YouTube was introduced in the internet. YouTube has changed the way in which online video is done and the same could happen to peer to peer lending with Lending Club.
The one problem facing peer to peer lending is that lenders do not have the resources and motivation to be able to draw borrowers with enticing offers like 0 percent intro rates and cashback perks as found in many credit cards. This is because the model of the business is still young and the consumer is being evaluated to determine the investment sustainability.
The business should be designed so that it does not appear as a last resort for consumers. As it aims reaching the $2 billion growth mark, Lending Club will ensure that it deals with the consumer intuitively to win his or her confidence.
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