Last week’s American Banker P2P Lending and Investing Conference held in New York City (October 6-7) attracted over 375 bankers, investors, platforms and service providers. The sheer fact that a storied institution founded in 1863 and dedicated to the traditional banking industry facilitated such a conference is significant and notes the growing legitimacy of the P2P or “marketplace lending” industry, as does the significant turnout.
In the first panel, which I was fortunate enough to moderate, I laid out the groundwork of the industry and provided conference participants with a basic understanding of the P2P ecosystem and the vocabulary used. Rohit Arora, CEO of Biz2Credit, Mike Cagney, CEO of SoFi, Jonathan Morris, President of BMC Bancshares, Brendan Ross, President of Direct Lending Investments, were panelists and guided the audience through the mechanics of the online lending and investing.
Later in the day, several newer lending platforms, including Pave, AssetAvenue, NoteX360, Upstart, Commonbond, Lendingrobot, Dealstruck, Patch of Land and Borrowersfirst, were able to introduce themselves to participants and give short pitches about their businesses.
On the second day, a panel titled “The Next Wave of Innovation” brought together the industry leaders including Renaud Laplanche, CEO of Lending Club, Ron Suber, President of Prosper Marketplace and Jilliene Helman, CEO of RealtyMogul. Each spoke frankly about the state of the industry and were all in agreement that it is still in very early days, but is here to stay.
When asked about the conference, Ron Suber, Prosper Marketplace President, stated,
“Today’s event was proof that banking has collided with Silicon Valley. The combined size of Prosper and Lending Club has proven that borrowing and lending are now changed forever. Traditional banks are now forming relationships with us so they are not left behind. The proliferation of platform diversification is further evidence of the permanency of the industry.”
“The fact that peer-to-peer lending was a feature of an American Banker conference is a testament to the continuing growth of our industry and its acceptance amongst the banking community. While the peer-to-peer lenders were generally met with enthusiasm from the crowd, the elephant in the room was clearly the question of whether we were complimentary or competitive to the banks. Banks are challenged with more liabilities (deposits) than assets (loans). This conference showed a growing acceptance from the banking community to rely on marketplace lenders to help address that mismatch.”
Brendan Ross, Direct Lending Investments President, observed,
“…that American Banker would host a P2P lending conference, and that it would be very well attended, is proof that the farmer and the cowmen should be friends—and will be, judging from the number and quality of the meetings I had, and saw happening around me, as banks, venture capitalists, and entrepreneurs find their niches in the growing marketplace lending ecosystem.”
In addition to the American Banker conference, Lending Club’s pending IPO adds another layer of validity to marketplace lending. Having a publicly traded platform indicates the institutional fortitude and constancy we can expect. Public registration also coincides with one of the core principals of P2P lending, which is transparency.
In addition to the current reporting requirements Lending Club must comply with, pursuant to the IPO, they must provide information about the performance of the platform and its business operations, not just the loans it is offering. Frankly this is nothing new, as much of this information is currently available on the Lending Club (and other platform’s) website and furthers the goal of the marketplace lending industry to educate and empower both borrowers and investors.
Both of these events mark a true coming of age and indicator of things to come for this burgeoning industry. With its current growth rate and current level of sophistication, I am looking forward to seeing the state of marketplace lending this time next year.
Georgia P. Quinn is a senior associate in Seyfarth Shaw LLP’s Corporate department. Ms. Quinn has led Seyfarth’s Crowdfunding Initiative, helping clients stay at the forefront of the enacted and proposed SEC regulations. Ms. Quinn has recently spoken to the Securities and Exchange and Commission, Congressional staff-members, leaders of UK crowdfunding portals and the Small Business Administration Roundtable; chaired a panel on crowdfunding for the ABA; presented to the Canadian Equity Crowdfunding Alliance, the Council of Development Finance Agencies, the Crowdfund Global Expo in San Diego and New York, the New York State Bar Association, at the New York State Securities Bar and in a websem for American Banker. Ms. Quinn is the subject matter expert behind Disclosure Dragon, the first semi-automated disclosure document generating software that helps prepare a PPM, Form C or Form 1-A at a fraction of the traditional time and cost. All views and comments above are strictly her own views and do not reflect the opinion or position of Seyfarth Shaw.