Global fintech and funding innovation ecosystem

The future of fintech: lending + services

Andreessen Horowitz |

fintech lenders in disguise - The future of fintech: lending + servicesIn 2006, LendingClub introduced a then-novel business model: the ability to offer online personal loans to millions of underserved customers. The peer-to-peer lender was a media and investor darling, hailed as a tech-enabled alternative to traditional banks. When LendingClub went public in 2014, it was valued at $8.5 billion, the year’s single largest US tech IPO. Now, five years later, that fintech pioneer has lost 85 percent of its market value.

Meanwhile, mobile upstart MoneyLion launched in 2013, also providing online personal loans—a direct competitor to LendingClub. Today, MoneyLion claims more than 5 million users and is valued at nearly $1 billion.

See:  Peer to Peer Lending: The Future of Fintech is Now

LendingClub had significant competitive advantages, from low customer acquisition costs—back then, personal loans keywords weren’t nearly as competitive on Google and Facebook was actively promoting LendingClub as an early F8 partner—to improved underwriting (the company provided lenders with access to customers’ credit score, total debt, income, monthly cash flow, and social data). So why is LendingClub experiencing growing pains while MoneyLion sees significant growth? Though the latter started out solely as an online lender, it quickly morphed into an all-in-one lending, savings, and investment advice app.

A new wave of fintech startups understand that regularity and rhythm are the basis of any good relationship. Take Tally, for example, which is building a large-scale lending business via automating credit card payments. Or Earnin, which provides ongoing value by granting customers access to an earned wage advance, say, every two weeks. Credit Karma hooks users by offering regular updates on your credit score. The services these companies provide to users—conveniently packaged in app form—go beyond loans. And by driving continued engagement, these companies don’t have to pay to reacquire customers.

In addition, the business (in this case, providing or facilitating loans) actually improves the customer experience and the overall product. Credit cards are a classic example. By using them to make payments, the consumer earns rewards—improving the experience and the product—while the credit card company makes money via the interchange. Likewise, for Credit Karma members, taking a personal loan can reduce credit card debt, thereby improving their credit score. Another example outside fintech is Google Ads (formerly Google AdWords). When useful results are returned, it actually improves the utility of Google Search, giving consumers a reason to re-engage with the broader product. Thus, a flywheel is created between customer retention and monetization.

See:  Lending Loop Surpasses $50 million Milestone and helps thousands of Canadian Businesses and Investors

In the coming years, fintech companies will continue to duke it out for dominance in various core verticals, whether that’s financing a home, paying off student loans, or managing credit card debt. But the real test of who will own the money button on your phone will be in who can build enduring customer relationships. By being holistic, fintech companies can earn a place in users’ regular app rotation—then cross-sell into new product areas. Even as businesses like LendingClub and Prosper are losing ground, peer-to-peer lending remains a $138 billion market. The next wave of lenders, though? They’re pocket-sized financial assistants.

Continue to the full article --> here


NCFA Jan 2018 resize - The future of fintech: lending + services The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit:

Latest news - The future of fintech: lending + servicesFF Logo 400 v3 - The future of fintech: lending + servicescommunity social impact - The future of fintech: lending + services

Support NCFA by Following us on Twitter!

NCFA Sign up for our newsletter - The future of fintech: lending + services


Leave a Reply

Your email address will not be published. Required fields are marked *

fifteen − 6 =