Wrap-up of the 2014 LendIt Conference

LendIt 2014 kicked off with a cocktail party sponsored by Lending Club
LendIt 2014 kicked off with a cocktail party sponsored by Lending Club

LendIt 2014 is now history. Around 950 people gathered at the Hilton Hotel Union Square in San Francisco for two days of educational sessions, presentations and networking.

There was a palpable feeling of excitement, I think in part because most people here did not consider this to be just another conference.  This industry is new and different and for many people, myself included, this is more than a job – it is our passion. It was this shared passion that made LendIt 2014 a special conference.

Earlier this week I gave a brief summary of the first day of the LendIt Conference. With this post I will go into a little more detail about both days.

Before the conference officially kicked off we had a cocktail party on the 46th floor of the Hilton Hotel that was sponsored by Lending Club. This was an informal affair where sponsors, speakers and select guests got to know each other while enjoying some of the best views in San Francisco.

LendIt Conference – Day One

When Renaud Laplanche kicked the conference off with his morning keynote on Monday it was standing room only in the main ballroom. And almost 2,000 people joined along online as we webcast the entire conference for free on www.lendit.tv.

Laplanche’s speech was highlighted by the announcement of Lending Club’s new partnership with Union Bank. That has been covered a lot in the press and partnering with banks was certainly one of the themes of the conference.

Here are some highlights and talking points from day one of LendIt 2014:

  • Laplanche introduced the term “marketplace lending” to describe the industry – peer to peer lending is no longer accurate.
  • Lending Club is partnering with Union Bank in a strategic alliance to provide innovative credit products to the bank’s one million customers.
  • There were more than 100 platforms in attendance at LendIt 2014.
  • Prosper is working on taking away the speed advantage of investing through the API. “That game is over,” says Ron Suber.
  • Also from Ron Suber: “Prosper is not interested in derivatives or synthetic products for this asset class.”
  • More automation is critical to providing better service for new borrowers – 70% of OnDeck Capital’s loan applications no longer require a human underwriter.
  • SAT score and type of major can be very predictive in assessing a young borrowers credit risk – Upstart incorporates this into their underwriting.
  • P2P Picks introduces LendGuardian for institutional investors without in-house analytics.
  • Semble has an innovative platform for providing loans to non-profits.
  • Mike Cagney, CEO of SoFi, explained why a sensible approach to securitization is good for the online lending industry.
  • Barclays invested in Rainfin, a tiny p2p platform in South Africa, because they see this industry getting very big and traditional banking getting smaller.
  • Credit is changing from a manual process to an automated and efficient exchange.
  • We need to further the education, awareness and understanding of borrowers. This is the competition today – not banks.

There was a well-attended cocktail hour sponsored by Prosper in the exhibit area after proceedings on Monday. Then everyone went their separate ways – with some attending one of the many unofficial parties being hosted that night.

LendIt Conference – Day Two

We kicked off day two of LendIt bright and early with a keynote by Michael Barr, a former Assistant Secretary to the Treasury and currently a law professor at the University of Michigan, and a Lending Club advisor. Here are some of the talking points from day two:

  • Michael Barr implored the platforms to take the high road when it comes to transparency and education – this will help prevent any further regulatory interest.
  • All of the major European p2p lenders are moving from a purely retail investor focus to a mix of retail/institutional investors.
  • In China 65% of personal savings are in bank deposits collecting minimal interest – this is one of the main reasons why p2p lending is exploding in China.
  • Lendvious is a new aggregation platform that wants to be the Kayak of p2p lending.
  • By 2025 Charles Moldow of Foundation Capital says that marketplace lending will be a $1 trillion industry globally.
  • Moldow also announced the release of his new detailed new white paper, A Trillion Dollar Market By the People, For the People.
  • Frank Rotman from QED Investors says that credit it like fire. It can light up a room or if not managed well it can burn your house down. Responsible startups in this space recognize this.
  • Many people do not realize that the federal government provides free data resources to help online lenders – details are at finance.data.gov.
  • We need to break down the walls between alternative and traditional data – just call it data. As long as it is predictive we should use it.
  • One of the growth opportunities for online platforms is to go down the credit ladder into “emerging prime” and even sub prime consumers have potential if managed well.

LendIt Innovator of the Year Award

Jon Barlow (left) of Eaglewood Capital accepting the LendIt 2014 Innovator of the Year Award
Jon Barlow (left) of Eaglewood Capital accepting the LendIt 2014 Innovator of the Year Award

Also on day two we presented the first ever LendIt Innovator of the Year Award. We created this award to recognize the company that has produced a major innovation in the previous 12 months that pushes the industry forward. The winner of the inaugural award was Eaglewood Capital Management for their work in creating the first ever securitization in this space.

On both days, while the sessions in the main ballroom were happening, we had a second track featuring many company presentations and demos. In these sessions people heard from many of the platforms and support companies in this industry. The second track was run efficiently by Simon Cunningham of LendingMemo with the support of Ryan Lichtenwald of Peer & Social Lending.

It was a whirlwind couple of days for me as I was often wanting to be in two places at once. I missed out on seeing many of the sessions that I wanted to see but not to worry. Every session was recorded and we will have everything loaded on the LendIt.TV (in reality our YouTube channel) shortly.

LendIt 2014 Presentations

We have received many requests for copies of all the presentations. Here are all the presentations from the main ballroom:

Renaud Laplanche of Lending Club (Size: 20 Meg file)
Peter Renton of Lend Academy (8 Meg)
Sam Hodges of Funding Circle (3 Meg)
Mike Cagney of SoFi (1 Meg)
Ron Suber of Prosper (not downloadable)
Michael Barr of University of Michigan (8 Meg)
Charles Moldow of Foundation Capital (3 Meg)

Next Up – LendIt Europe

Now that LendIt 2014 is behind us we are turning our attention across the pond. LendIt Europe will be on November 17 in London. Stay tuned for more details.

Thanks to everyone who helped make LendIt 2014 the big success that it was. I look forward to seeing you you in London in November or at LendIt 2015 in the spring.

LendIt 2014 organizers from L to R: Bo Brustkern, Jason Jones, Peter Renton and Dara Albright
LendIt 2014 organizers from L to R: Bo Brustkern, Jason Jones, Peter Renton and Dara Albright
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Hippo387
Hippo387
May. 9, 2014 6:50 pm

Very interested in hearing more about this:

Prosper is working on taking away the speed advantage of investing through the API. “That game is over,” says Ron Suber. Also from Ron Suber: “Prosper is not interested in derivatives or synthetic products for this asset class.”

Could this have implications for some of the new businesses that have popped up offering investors an API speed advantage? Personally, it’s nice to hear Suber/Prosper take this stance …

Dan B
Dan B
May. 10, 2014 6:56 pm

So other than being “passionate” about having made lots of money by organizing this conference……………what exactly is there to be passionate about, Peter? What, the massive increase in options for the non-accredited investor? No, that’s not it. Perhaps the ever increasing returns for the average investor going forward? Well we all know that’s definitely not it. Perhaps the new regs that have been put in place to make the industry safer for us investors? No, that’s not it either, for there have been none. Oh, wait I know. It’s the increase in “transparency” that you’re all passionate about right? Well that can’t be it. So what is it? Passionate about increasing volume when none of us are stockholders?

Also, since I’m not as passionate & don’t comment much around here anymore please correct me if I’m wrong on the following. So the narrative used to be: banks are inefficient, they haven’t changed in hundreds of years. LC is going to revolutionize the financial industry by, among other things, allowing borrowers to bypass banks & get a better interest rate because we are so much more efficient than them. (Of course the real reason that LC can offer lower rates because they have no skin in the game since all the risk of default is passed on to us the investors & they on the other hand make most of their money on origination fees. Of course none of this is mentioned, but I digress)

So nowadays, the narrative has changed to: banks are not our competitors, but rather our partners, who will help us grow………….. & presumably by partnering with us we will help them grow too? Do I have the gist of this right? What’s next? Perhaps partnering with banks that send out zillions of unsolicited MC/Visa offers………………Then a year later hit those people who accepted the offer with a LC consolidation loan offer? Now there’s an idea to be passionate about huh?

Or is all this flailing around a tacit admission that the pool of borrowers isn’t nearly as bottomless as many here have suggested it is. (Trillion dollar business? Yeah, only if you can get the business through the banks)
An admission that regardless of how deep the pool is, it’s only important if you can reach them & make them your customer. So you do what you need to do…………….including partnering with the entities that some people here have semi seriously suggested p2p would replace some day. Replace, really?

I could continue the rant, but like I said, I don’t see much to be really passionate about around here.

Dan B
Dan B
May. 12, 2014 9:41 am
Reply to  Peter Renton

Peter you’ve been hanging around conference attendees for too long & buying into the slogans that were all around you. Unless they themselves become banks & engage in fractional banking this industry will definitely not become ” the backbone of a new financial world order over the next couple of decades”…………or ever. And we should all be thrilled, for the financial world order would collapse if it did.

“Money” is very cheap & has been very cheap the entire time this industry has been around. But this cannot last forever & is unlikely to last the next few decades without a hiccup. When interest rates rise, the average retail investors will walk. They will walk because no one’s going to sit around getting 4-6% real return here, when they can get a FDIC guaranteed 4% on a 3 year CD. And before anyone starts talking nonsense about how they’re making 12% or whatever number, I said average retail investor. Just because some of us are earning more than 4-6% does not change the fact that the “average” is earning that. The main p2p narrative, as you call it, remains as it is only because interest rates are so low & investors have few other choices, P2p will have to change that narrative too when interest rates rise……………..because returns here won’t.

And finally, yes YOU can build a portfolio consisting of consumer loans, small business & real estate & I’m sure very soon, mineral mining loans on Mars as well……………….if you’re an accredited investor. What percentage of investors are “accredited investors”, Peter? 10%? 5%? 2%? Less than that?

RawRaw
RawRaw
May. 11, 2014 9:15 am

Sounds like a great conference! Hopefully I’ll be attending one of the future events.

Hopefully in the future the emphasis can go from just sales pitches to including risk considerations. It’s not like this is the first time people have tried to automate credit underwriting or utilize non-traditional data. It’d sure be of interest to see how some of those attempts worked out. People like DanB asking hard questions have a very real purpose when everyone is so passionate and in agreement.

RawRaw
RawRaw
May. 16, 2014 5:34 am
Reply to  Peter Renton

Oh I didn’t intend it to sound that way. I meant more, when you get a lot of passionate people in a room together sometimes they benefit from people not as passionate — especially when pioneering new trails in finance.

But I think you got what I intended to say 🙂

Alejandro Cosentino
May. 12, 2014 7:21 pm

Great conference, better networking and the best organization. As a participant I enjoyed great professional sessions which enrich our everyday job. As a sponsor, Afluenta has obtained a very broad reach across the key players of this nascent and potent industry. Great Job Lendit Conference Team!

Dan B
Dan B
May. 12, 2014 10:40 pm

So Alejandro, after attending the conference are you also planning on partnering with a bank like perhaps a Banco Macro or Banco de Galicia? Or is your company sticking with the “para evitar los bancos” slogan?? 🙂

Alejandro Cosentino
May. 13, 2014 8:06 am

Dan,

Thanks for your comments. First of all, our tagline (slogan) is “crédito humano” (human credit) not “para evitar a los bancos” (to avoid banks). We want to help customer to avoid what they hate from banks and in fact we are successfully doing that since we´ve got a 95% of customer satisfaction.

Partnering with banks is always an option although, after the conference I could confirm that there’s a huge amount of alternatives for originating loans than banks, even in Latin America. What´s banks are hard to learn that people request a different approach and “marketplace lending” is providing them. Take a look to this article https://www.fastcompany.com/3027197/fast-feed/sorry-banks-millennials-hate-you. Banks have better funding cost, huge amount of valuable data and large customer base. We have unbeatable operational cost, better acquisition CPA and approach and better customer experience. Together we may get what has been elusive for banks: “happy and satisfied customers”. It´s a matter of collaborating to reach that goal although the approach banks already got is the “record company” one.

Regards,

Dan B
Dan B
May. 13, 2014 9:56 am

Alejandro………..Actually my comment was only semi serious, hence the smiley face at the end. But since you’ve decided to take this seriously by mounting a serious defense/response, I will respond in kind & point out that your vehement denial of the “para evitar a los bancos” phrase is rather amusing since I copied it from the very top of your website homepage where it was prominently displayed as of last night. So regardless of whether that is or isn’t your main slogan, those are your words, not mine.

Alejandro Cosentino
May. 13, 2014 10:08 am

Hey Dan,

We are not defensive. We want to educate about what we do. We want to help people to “avoid banks” since they are expensive, bureaucratic and slower than us. By the way, if you see the phrase “para evitar a los bancos” is located under “Subasta” (auction) menu icon which is the right way, the marketplace, to avoid banks if you want to. 🙂

Best regards.