FinTech Insurgents? How Lending Club Is Working With Banks
Although the panel was titled “Banker Beware: Meet the FinTech Insurgents,” Laplanche dispelled the notion that Lending Club is at war with the banks, insisting instead that his company works with and even partners with traditional banks. “I think we’re a threat to the model, but we’re not necessarily a threat to the banks,” he told Weisenthal, adding, “When we talk about transforming the banking industry, it’s a positive transformation for the consumer, but it could be a positive transformation for the bank as well.”
In fact, Laplanche noted that, in the last quarter, approximately 20% of Lending Club’s funding came from banks who have taken to investing on the company’s platform. Additionally, Lending Club has partnerships that offer bank customers co-branded loans.
As moderator Weisenthal pointed out, “[FinTech companies are] theoretically providing a service to customers better than what the banks can do but providing it with them.” When he then asked what the core identity of banks will be if startups are doing major parts of their business in a better way, Earthport CEO Hank Uberoi responded by comparing this conundrum to the auto industry. “You buy a car, you buy a BMW — they don’t make the gearbox, they don’t make the air conditioning system, they don’t make the tires, but they own the economic model, they own the design,” he said.
Laplanche added that, while Lending Club offers a low cost of operation and delivers a good customer experience, the banks have a lower cost of capital. “The combination of a bank and Lending Club is really the best of both worlds where you get the lost cost of operations and the lowest cost of capital and, together, we can drive down the cost of credit for consumers and businesses.”
During the Q