P2P Lending in the News a Lot Recently

Comments

1. David says

   January 28, 2011 at 6:55 pm

   The interviewers’ relative cluelessness as to what Lending Club is or actually does in my opinion speaks volumes about what is necessary if Lending Club is to end up reaching a break-even origination volume.

   I feel that fairly soon they need to step up their “name recognition” game a fairly high degree, and shift the capital they were once pouring into bonus payouts into more traditional marketing (billboards, subway / bus ads, television commercials, etc.). For example, simply a well-placed ad in a Manhattan subway line could possibly yield hundreds if not thousands of investors and borrowers for close to the same they were spending on bonus incentive offers, while at the same time massively increase name recognition. National advertising is probably not within their budget capacities at this time, but only once Lending Club becomes a “household name,” so to speak, can it begin to truly compete with banks on a meaningful level (and of course get to the 20 million monthly origination volume, or 25 million, or wherever the break-even level is).

   Reply

2. Dan B says

   January 28, 2011 at 8:34 pm

   20, 25 million a month? I’d say it’s closer to a BILLION a year in loan originations before one can start talking about being a competitor on a meaningful level. Even that figure would work out to just $3 million a month in origination fees.
   And at that point I guarantee you that every XYZ bank will find a way to throw their hat in the p2p ring & take a chunk of the market.

   Reply

3. David says

   January 28, 2011 at 9:35 pm

   @Dan

   The $20-25 million/month figure I’m talking about the “break-even” figure I’ve heard tossed around before, whereby origination fees plus loan service fees finally equal operations cost and they can begin to talk about profitability. As things stand now they are operating at a fairly large net loss, and there is no guarantee that they ever will make a profit.

   I agree that when (if) the p2p market explodes everyone will want a piece of the action, but if Lending Club can secure a reputation now as “the” p2p lending outfit, it will be a great aid to their maintaining a competitive moat in the future.

   Reply

4. Peter Renton says

   January 29, 2011 at 7:08 am

   @David, I have heard the $20-25 million bandied around as well as a break even point. I will be surprised if LC doesn’t surpass $20 million a month before the end of the year. And Laplanche has said in these interviews the he expects LC will turn cash flow positive in 2012.

   I have also heard that LC will be moving away from investor bonuses this year. I don’t know about a national advertising campaign, but I am sure they know they need to do more. Zopa in the UK just launched a national TV campaign and this week did record volumes in originations. I agree more needs to be done to get their name out there and all these PR appearances help.

   @Dan, I think you have your calculations wrong. At $1 billion a month in loan originations that will put revenue from originations at $30 million a month (assuming an average 3% origination fee). Then with investor service fees running at 1% of the entire active loan portfolio, you would probably have another $5 million a month in service fees. So, that would be a business grossing $400 million a year roughly.

   Sure there will be more competition by then. But LC will have the advantage of a longer track record of loan history. And with the SEC registration hurdle not every XYZ bank is going to want to jump into the ring.

   Reply

5. Dan B says

   January 29, 2011 at 12:18 pm

   Attention to detail Peter. I said a billion a year.

   Reply

6. Peter Renton says

   January 29, 2011 at 8:06 pm

   I stand corrected. My mistake.

   Reply