Spring 2022

LENDING CLUB CASE

STUDY

SUBMITTED TO
Professor Ankur
Mehra

Submitted by:
Aman Jain – 2110120004
Shivansh Pathania – 2110120025
Arpita Gupta – 2110120007
Karnika Dubey – 2110121026
 1. SUPPOSE YOU ARE AN EQUITY INVESTOR BASED IN THE US AND LOOKING TO INVEST IN
LENDING CLUB SHARES IN 2016. S HOULD YOU VALUE LENDING CLUB AS A
MARKETPLACE TECHNOLOGY COMPANY OR SPECIALTY FINANCE COMPANY ? WHY?
Answer
As equity investors, we would categorize Lending Club as a marketplace technology company
because its business model and technological implementation separate it from specialty finance
firms.
Although Lending Club does seem to operate in a similar manner to a daily finance company,
one important distinction is that Lending Club does not keep cash on its balance sheet to
finance and hold loans. As a result, interest rates will have little impact on its margin, and it will
not require additional capital to grow. By giving investors and borrowers more options, Lending
Club harmed its position in the lending industry.
Lending Club also uses technology to lower its operating expenses while boosting customers'
access to loan information. Due to technology improvements, borrowers and investors now
have more control over their loans and investments. Because of all of these characteristics,
Lending Club has evolved into more of a marketplace than a financial institution.

2. WHAT SHOULD LAPLANCHE DO TO CONVINCE YOU AND OTHER W ALL STREET INVESTORS
THAT L ENDING C LUB WOULD REMAIN A MARKET LEADER IN THE PEER -TO-PEER LENDING
SPACE ?
Answer
To convince us and other Wall Street investors, the company should adhere to what Laplanche
stated that is deal with negative messages, communicate more opportunities, and highlight the
differences between Lending Club and specialty finance companies, according to our
understanding the three actions that we think Laplanche should take in order to achieve his
goals are:
 Should build his own community, a place that customers would not want to leave. As
in this case, we see that Lending Club has an outstanding customer volume, but
customer switches to other services when competitors start offering them better loan
products. So, building such a community is very much important for Lending Club,
developing such a platform for Lending Club would help users to communicate investing
strategies or introduce new loans.
 Emphasize why Lending Club is a better place for loans rather than on
differences, as recognizing the differences is not enough to motivate people to use
Lending Club’s service instead transparently showing advantages of Lending Club’s
service would make potential customers start or switch to use Lending Club.
 Emphasize profitability, being the best way to convince me and the Wall Street
investors as the highest question about Lending Club’s steady-growth strategy is a
disguise of inability to make huge growth and cannot sustain its customer acquisition but
when Lending Club’s customers like me and Wall Street start speaking for its service,
Lending Club is really doing good with its name and image with using positive messages
against the negative ones.