LENDINGCLUB
Revolvers – those are people who don ' t pay off the credit card balance ; they have a loan . And then there ' s transactors – those are the people who use the card as a convenience mechanism and they pay it off every month . Those transactors are getting benefits . They ' re getting rewards , miles , cashback , and all of those things . The revolvers have to pay for that .
“ So , you have one half of the customer base paying for the other half of the customer base . That ' s structural inefficiency . If you just looked at that customer and said , ‘ Hey . What is the true cost of credit that you need ?’, you ' d find that it ' s lower . That ' s what we do with personal loans .”
Meeting customer needs As well as taking a dynamic approach to lending , LendingClub is unusual in that its core business model increases financial inclusion by expanding access to lower cost credit . The company takes the approach that current customers and the system are ripe for a revamp . While LendingClub ’ s marketplace model enables it to seamlessly serve a broad range of customers , its core customer has a relatively high FICO score of around 700 and an annual income north of $ 100K . The team focuses on providing borrowers that are charged over the odds by lenders , such as women and minority groups , with a far better deal .
“ Our customer is highly banked ,” he says . “ In fact , they ' re 100 % banked . They ' re just not well-served . It ' s working out better for the banks than it is for them . What we are doing for them is providing a nationwide digital solution that disproportionately helps people who are living in areas where bank branches are closing , because more and more bank branches are closing every year .”
40 October 2022