Peter Thiel, PayPal co-founder, opened day 2 of LendIt USA 2016 with his thoughts on the future of marketplace lending and Fintech. He positioned Fintech as essentially a software-as-a-service movement for payments, and said to remember that systems and software are still paramount to success. Thiel thought discussions of a Fintech bubble were misaligned, stating, “If there is a bubble, it’s due to high valuations due to low interest rates, it’s not in tech.” He also noted that tech is essentially the only industry in America that still works. The Fintech evangelism was well received by the room full of startups and their stakeholders.
Regulation was a popular theme during day 2, with a host of panel discussions with marketplace lenders and regulatory actors. San Francisco Federal Reserve President John Williams talked positively of the role that marketplace lending could provide for underserved areas and small businesses, suggesting that there is enough room to share with traditional banks. However, he was sure to note that when it comes to regulation, “if it walks like a duck and quacks like a duck, it should be regulated like a duck,” alluding to the increasingly bank-like products of these non-banks.
Discussants on panels both noted that they are in fact regulated through their partnerships with FDIC member banks, and ultimately agreed that regulation need not be a bad word. Thiel offered that regulatory compliance can be a huge competitive advantage in a new industry, and Richard Neyman, Lending Club’s new adviser on regulation, quipped, “Regulators are like the dentist: you don’t want to go, you don’t enjoy being there, but you are better off after.”
One of the most popular sessions of the day was a fireside chat with SoFi co-founder and CEO Mike Cagney. Cagney discussed SoFi’s core strategy of relationship building, grabbing their target, the HENRY (highly-educated-not-rich-yet), early with a personal loan or student loan refinance, then cross-selling to them for all their financial needs. He also mentioned that SoFi was launching an insurance product this year, and that their mortgage loans are both the most expensive product it offers and the most rewarding.
When asked if SoFi would begin to expand acquisition outside of its HENRY base, he responded that they feel there are enough customers who meet their criteria and are underserved in lending.
You can read the full recap of day 1 at LendIt USA 2016 here. A comprehensive post-conference report will be featured in the April Issue of Comperemedia’s Unsecured Lending Monthly.
Claude Lawrence is a Senior Research Analyst with Comperemedia. His areas of focus include Credit Cards, Unsecured Lending and Banking.
