Last week LendingClub held their very first Investor Day in New York. I was lucky enough to be invited along with about 150 others to the Morgan Stanley offices in Times Square. We heard from most of the LendingClub executive team as they laid out their vision for LendingClub and the opportunity they see in front of them.
The Three Most Interesting Announcements
While much was said over the more than three hours of presentations here is what I considered to be the three most interesting announcements from the day.
- A New “Exchange Traded Partnership” is Coming
This is a really big deal in my opinion and I was surprised it was not mentioned until the fourth presentation of the day when Patrick Dunne, their Chief Capital Officer, took the stage. LendingClub will be launching an Exchange Traded Partnership (ETP) that will be traded like a stock (similar to an ETF) on a public exchange but will be backed by LendingClub loans. It will be available to all investors and will be liquid. This could be a game changer as it will provide all investors with a simple and accessible way to get exposure to LendingClub loans. No timetable was given for its implementation and if it launches in 2018 it will likely be late in the year.
- LendingClub Has Been Testing Direct Payoff Loans
One of the criticisms investors have had over the years is that when someone takes out a debt consolidation loan it is not clear whether they really pay off their credit cards or use the money for other purposes. LendingClub has been running a test for some time that pays off a borrower’s credit card balance directly to give some certainty over loan proceeds. LendingClub claims that this will help them increase origination volume by 5% as they will be able to approve more borrowers knowing that their credit card debt will be paid off.
- A New “Snap and Save” Approach to their Auto Finance Product
LendingClub announced a very handy new feature for those borrowers taking out an auto loan. A prospective borrower can simply take a photo of their registration and LendingClub will pre-populate fields eliminating almost all of the data entry. While this feature is not that groundbreaking it was interesting to me because it demonstrated that LendingClub is focused on developing the auto loan segment.