Sustainable Banking - Lending Club
Posted by Max Dunn Sat, 21 Feb 2009 19:35:00 GMT
With the recent financial breakdown, it was refreshing to hear of a new type of bank at the VLAB event Upside of the Downturn on January 20th, 2008.
Renaud Laplanche, Founder & CEO of the Lending Club described how normal banks pay 2-3% but collect 16%. Lending Club lenders on the other hand, get 10.29% while borrowers pay 13% on average. The Lending Club narrows the spread rates by transacting over the Internet and having people lending to other people. As a lender, you can choose which borrower to lend to which creates a connection and social responsibility among users. Borrowers are also carefully screened and 85% are declined, so only prime borrowers are accepted. This leads to a low default rate of 2.7% and a late rate of 3.8%. The Lending Club is experiencing high growth rates of 50-100%, and in December of 2008, $2.5M was placed.
Maybe this is a new model for more sustainable banking!
I have had a poor experience with Lending Club. I loaned out $1000. and have had many people default. I’ll be lucky if I get my $1000 back.