Renaud Laplanche knew what he was doing as the founder and CEO to LendingClub (est. 2007), the largest by volume peer-to-peer lending platform in the US. He took LendingClub through the biggest IPO in 2014 for US Tech and, that way, kick-started online lending trend and public interest on lending-related fintech.
He resigned earlier this month, forced by his board of concerned directors and stakeholders following questionable practices LendingClub did under his watch. LendingClub’s shares plummeted, its loan buyers stop buying and the P2P lending future seems uncertain at best.
Impacts on Asia’s P2P Lending
e27 said it’s just a jab to the face of the industry, not a knock-out haymaker. A stiff jab I might add, so it still hurts.
With $ 8 Billion valuation following its IPO, LendingClub is still a giant among its peers. Their market cap dwindled to $ 3 Billion following the turmoil but lo and behold:
Its operating revenue grew by 87 per cent year-on-year to US$151.3 million and its adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) was US$25.2 million, a 137 per cent increase from Q1 2015.
The other notable metric was its servicing portfolio almost doubled between year-on-year, from US$5.6 billion in Q1 2015 to US$10.2 billion in Q1 2016. The company also paid out US$1.5 billion in principal and interest returns in Q1 2016.
Meaning, no impending collapse any time soon for LendingClub in particular or for P2P/online lending companies in general.
What Ezubao, China P2P Lending, did was even more devastating to Asia’s online lending industry (than what Laplanche did to US lending marketplace), because it hurted the trust–the very core of the P2P–of the borrowers, investors and regulators with the business itself.
I can’t imagine the tensions endured by all P2P lending founders/executives and investors right now.
P2P Lending itself, Is it Dead?
Fintech is just taking off in Asia. There are too many problems that need to be solved in this sector in Indonesia alone: lack of reliable e-payment system and, definitely, alternative lending. Will it stall the growth we can already see brewing?
For P2P lending, death isn’t something new. They’ve been declared dead as early as 2008 when the subprime mortgage crisis emerged. At least once every year after that, someone has never failed to declare its death…and its resurrection… before being declared dead again, making it a fintech’s version of a phoenix…or simply a very resilient cockroach.
Many argue however that the concept of P2P Lending has changed. The P is no longer stands for peers like you and me, but instead for panks and porporations. Indeed, smelling blood in the air, they came in hordes to try to take advantage of the higher return those P2P platforms offer.
For some unknown reason, both the news and critics are focusing too much on the investors, return rates and profits (and all kinds of bad news) rather on the other end of this system: the borrowers. No. I’m not talking about that San Bernardino shooter who happened to secure $28,000 of loan a day before the shooting, but to all borrowers out there who banks and other institutional loan providers have deemed unfit to receive loan.
The goal is always about these borrowers isn’t it? Empowering them?
It’s especially true in Indonesia where financial inclusion move really slow toward the unbanked/underbanked.
To me, that’s a reason enough to build and maintain a reliable system of lending.
Alternative lending is still in its infancy. It will be a shame if something as beneficial as this is dying out too soon due to a few (but fatal) misconducts of some players.
That’s why I believe that, as this fellow wrote, all the setbacks identical with P2P lending nowadays is not a dying sign, but instead a symptom of growing up? You know, like some sort of growing pains?
Who knows, but I hope so.