Lending Club Announces Retirement of P2P Lending Platform
LendingClub, an online marketplace for borrowers to access loans funded by consumer investors in amounts as low as $25, recently announced that its peer-to-peer (P2P) lending platform will be completely shut down by the end of the year. The P2P lending model has not proven to be as effective as many in the industry had hoped, and there are few platforms currently in operation that focus solely on retail investors.
Investors received an email explaining that as the company is moving “towards becoming a full-spectrum fintech marketplace bank, we have looked closely at our current and future product suite and have started development of new products to help our members keep more of what they earn and earn more on what they keep.”
According to Banking Dive, LendingClub is expected to close a $185 million deal to acquire Radius Bank by mid-2021, at which point the 14-year old company would obtain a banking license.
Over the years, LendingClub has shifted its focus more toward institutional investors than the retail investors it primarily focused on when it began in 2007. Matt Burton, the founder of Orchard, said “while the fintech industry has been moving away from peer-to-peer lending since 2016, Lending Club’s decision to shut down its retail P2P platform marks the end of an era.”
“During its rise it had the promise to transform lending into a more transparent and democratic process. Hopefully, future entrepreneurs will find a way to break through where P2P failed,” Burton continued.
LendingClub has stated that it is looking to develop new products that would maintain the peer-to-peer idea of the Notes platform. It also plans to launch a high-yield savings account for its retail clients, who would automatically be able to make weekly transfers from their current investment accounts.