Lending Club Reaches $400 Million in Loan Originations

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Yesterday morning, Lending Club announced its achievement of reaching the $400 million mark in loan originations:

“The milestone comes less than four months after Lending Club reached $300 million in total loan originations in July. A record $27.5 million in personal loan originations in October contributed to the milestone. Lending Club loan originations are growing by more than 150 percent year-over-year, and the platform has now paid investors more than $33 million in interest.”

To learn more about Lending Club, watch its demo from FinovateStartup 2009.

Finovate Alumni News– November 4, 2011

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  • Plastyc launches UPside Visa Savings Purse.
  • Diversinet receives U.S. Patent for securely storing information on a mobile device.
  • American Banker reports Ohio Valley CU is working with Truaxis to offer discounts.
  • Xero calls on UK Gov to deliver better reporting, not simpler reporting for micro businesses.
  • Lendio adds 40 Banks, offers local business loans to 70% of the U.S.
  • Lending Club reaches $400 million in
    loan originations.

  • Huntington Bank works with Kony to
    create an iPad app.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

New Online Banking Report Published: True Virtual Banking Has Arrived

image I still remember the day in early 1999 when I met with Elon Musk and his 3-person team in a borrowed conference room in Palo Alto. They were plotting the complete and total disruption of the banking industry and fully expected to be one of the largest five U.S. banks by now.

The startup was named X.com and its original business plan was to acquire one or more existing banks to provide the credibility, and deposit insurance, of a traditional bank. While I was in awe of their ambition, I thought the plan had a flaw. I told them they’d be better off staying virtual, with no bank ownership slowing down their decision making and ability to take risks.

I’ll never know if they would have listened to me, because soon thereafter X.com began experimenting with P2P payments via email, and they saw that it was going to be huge. So they jettisoned banking, merged with PayPal, and the rest is history.

Why the reminiscing? That was the last attempt by a major tech startup to take on the U.S. retail banking industry via virtual channels (note 1).

Fast-forward to 2011: At this year’s FinovateFall, we saw the launch of not one, but two well-funded attempts at disrupting the incumbents. One through debit/checking/savings and the other through wealth management:

  • BankSimple: DNA from Twitter, analytics, and consulting
  • Personal Capital : DNA from Intuit, PayPal, Everbank and Fidelity Investments

Both companies are what I call True Virtual Financial Institutions, meaning they are complete front-ends to your money, including transaction capabilities and customer service, but they outsource the actual holding of customer funds to fully-regulated partners which pass FDIC/SIPA protections. This allows the newcomers to focus on user experience and service while moving much faster without the regulatory friction experienced by traditional financial institutions.

Others well-known companies using virtual models: Betterment (also profiled in the report), iBankUp.com (Plastyc) and Perkstreet.

Note to bankers: True virtual banking needn’t be limited to tech startups. These techniques can be employed by traditional companies to expand beyond regional or industry boundaries. The report outlines seven models for doing just that.

__________________________________________________________________

About the report
__________________________________________________________________

True Virtual Banking Has Arrived (link)
BankSimple, Personal Capital, Betterment and others go branchless,
paperless and “bank-less”

Author: Jim Bruene, Editor & Founder

Published: 1 Nov 2011

Length: 48 pages

Cost: No extra charge to OBR subscribers, $395 for others here

____________________________________________________________________

Notes:
1. I should add that Lending Club, Prosper, Zopa qualify as major entrants bound on disrupting banking from the lending side.
2. BankSimple, Betterment, Personal Capital and Plastyc FinovateFall 2011 demo videos are available here.

SecondMarket Reels in $15 Million From Former Facebook VP

SecondMKTLogo.jpgYesterday, SecondMarket announced a new round of funding: a $15 million Series C from The Social+Capital Partnership, a new venture fund established by former Facebook executive Chamath Palihapitiya. He will also join the SecondMarket board. 

This brings SecondMarket’s total funding to $34 million with a $200 million valuation according to the Wall Street Journal, an increase of $50 million since February 2010.
To learn more about SecondMarket, watch its FinovateStartup 09 demo.

doxo Adds AT&T as a Biller and Launches New Feature

Thumbnail image for doxologo9.11.jpgMy collegue at Netbanker recently covered doxo’s recent addition of auto pay with limits:

“Digital ebill storage and payment startup doxo announced an important new feature to its service today, the ability to automatically pay ebills that fall within preset maximum values. For example, as long as my family’s wireless bill is under $250, doxo will automatically pay it and send me a confirmation message. If it’s more, I get an alert advising me to take a look at my bill before it’s paid.”

It also announced the addition of AT&T, a biller with almost 100 million billing accounts.

To learn more about doxo, watch its FinovateSpring 2011 demo

Finovate Alumni News– November 3, 2011

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  • Reuters highlights how ReadyForZero benefits those in debt.
  • Braintree continues rapid growth — now processing $10 million daily.
  • doxo adds AT&T as a biller and launches new feature.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Payments Innovation: doxo Adds "Autopay with Limits" to Ebilling

image Digital ebill storage and payment startup doxo announced an important new feature to its service today, the ability to automatically pay ebills that fall within preset maximum values. For example, as long as my family’s wireless bill is under $250, doxo will automatically pay it and send me a confirmation message. If it’s more, I get an alert advising me to take a look at my bill before it’s paid.

That feature would have saved me more than $1,000 two years ago when I gave an old mobile phone to a new employee without thinking to upgrade the calling plan. I ended up paying $400 to $500 monthly bills for several cycles before I noticed it on my credit card statement. I was using estatements (which I never look at) and had no idea the charges had mushroomed from the $40/mo I’d been paying. 

image Doxo also announced the addition of AT&T to the service, perhaps the biggest biller in the country, with nearly 100 million accounts. That should provide momentum that hopefully leads to more major billers supporting the platform. The only other national biller currently participating is Sprint.

Bottom line: Payment limits should help convince more consumers to enjoy the convenience of autopay, while still maintaining the control/peace of mind they are accustomed to when paying manually.

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Notes:
1. Doxo added payments in February this year (see post) and demo’d at FinovateSpring 2011 (watch video here).
2. Hearst-backed Manilla is another ebilling & filing contender, with an interesting partnership with Citibank that could jump-start its service.    
3. See our recent Online Banking Reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel, for more info.

RIP Debit Fees: The Winners and Losers

image The debit card fee debacle was an interesting drama to watch. I’m sure there are lots of lessons here for a future biz school case study. But really, was $5/mo for a service that many consumers use daily, such a big deal that even Obama had to call BofA out? We spend two or three times that each month on extra pizza toppings alone, but I don’t see anyone bad mouthing the pepperoni industry.

While it’s clear in retrospect that BofA should have played this differently, rolling out the price increase gradually for instance, or upgrading its debit card product at the same time (note 1), the bank was at least being up-front with its pricing and reasons.

And the whole episode is not just a loss for BofA, but for the whole industry, as one its most popular products is turned into a regulated utility with Durbin controlling prices on the merchant side and public opinion squashing fees on the consumer side.    

Here’s the winners and losers from BofA’s capitulation on debit card fees:

Losers

  • Big banks/shareholders: Obviously, the big banks who were all (except Citi) testing various fee options, miss out on added revenues in 2011 and for however long it takes before they implement other less-transparent price increases. And of course, BofA loses the most as it took the brunt of PR damage and now every pricing move it makes will be put under a microscope. 
  • Small banks and credit unions: The $5 fee was a windfall for small FIs in their marketing war against the big banks. Now what’s the rallying cry for Bank Transfer Day? (And many small FIs would eventually have hopped on the fee bandwagon once the consumer backlash faded.)
  • Government/taxpayers: The big banks employ millions directly, and millions of other jobs are indirectly supported by banking revenues. If this leads to an industry-wide layoff (note 2), it could add hundreds of thousands to the unemployment roles just in time for the 2012 elections. And the whole anti-bank rhetoric from Congress and the Administration, along with the implied threat of more price controls, makes it harder for banks to raise capital, weakening an already fragile ecosystem. Does anyone really want to risk a repeat of 2008?

Winners

  • Merchants: Widespread debit card fees would likely have caused a reduction in their use and a corresponding increase in the use of cash, checks and credit cards which would have driven merchant costs up.

Mixed

  • Consumers: Short-term it’s a win. The grass-roots victory feels good and avoiding the $3 to $5 monthly fee is nice (it just about covers that Netflix price increase…so you can keep getting the DVDs in the mail). But longer-term, it’s probably a wash. Banks need to improve revenues, or they will either have to cut services, lay off employees, and/or find sneakier ways to raise prices ($40 overdrafts anyone?).

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Notes:
1. We recently looked at optional fee-based services banks could build using remote banking value-adds. See our May 2011 Online Banking Report (subscription). 
2. I’m not predicting layoffs. Honestly, I have no idea. There are way too many factors at play to make a direct connection. But certainly, the one-two punch of interchange price controls combined with the fee backlash, make cost cutting seem the more palatable course of action to improve profits. And to the extent that smaller players pick up incremental business, they could hire a good chunk of those laid off.

Finovate Alumni Website Traffic in September

Each month we survey the Web-traffic performance of Finovate alums using data from Web-analytics company Compete.
Out of 268 alumni, 80 had more than 10,000 unique U.S. visitors in September 2011 and are included in the tables below. Of those, 33 (41%) had more visitors in September than August. Year-over-year, 42 (52%) had traffic increases.
Private Companies
  • Seeking Alpha and Cortera had the highest traffic in September with 2.1 and 2.0 million unique visitors, respectively. Cortera also had the highest increase in number of unique year-over-year visits with over 1.5 more visits in 2011 than in 2010.
  • Kabbage had the highest percentage growth year-over-year, up 280x.
  • Weemba saw the highest monthly growth percentage with more than 7.5 times the number of unique visitors in September compared to August.
  • SmartCredit.com had the highest increase in number of unique year-over-year visitors, growing by 126,000.
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Source: Compete.com retrieved the week of October 26, 2011
 
1) The previous month recorded was August 2011
2) Sears Credit Score is powered by CreditKarma.com
3) Truaxis was formerly BillShrink
4) Kasasa is powered by BancVue
Public companies
 
  • CheckFree had the highest percentage growth year-over-year, with over 7 times the number of visitors this year than last year.
  • Intuit had a notable increase in number of unique, year-over-year visitors, increasing by 300,000 visits.
  • Check Point had the highest month-over-month percent growth, with 41% more visitors in September than in August.
PublicWebTrafficSeptember2.jpgSource: Compete.com retrieved the week of October 26, 2011

1) The previous month recorded was July 2011.
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Notes:
1. We reviewed 268 Finovate alumni. Only those with at least 10,000 unique visitors in July are listed.
3. NM = not measurable
4. t= tie
5. Compete estimates online visitors based on the activity of a panel of more than 2 million U.S. Internet users. It is only an estimate of traffic and may undercount at-work usage.

Finovate Alumni News– November 2, 2011

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  • Prepaid Awards honors CashStar and Dell for Best Prepaid Gift Program.
  • Backbase names Visionary in latest Gartner Magic Quadrant.
  • American Banker discusses T8 Webware’s perfect solution for National Grand Bank of Marblehead.
  • Tab Times looks at the progress & success of Kashoo’s iPad app.
  • The Wall Street Journal reports Visa Europe takes 8.8% stake in Monitise.
  • Check Point buys compliance solutions co Dynasec.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Alumni News– November 1, 2011

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  • Kashoo’s small business iPad accounting app hits 5,000 downloads on iTunes.
  • CarryQuote named аѕ a winner οf the European Bully Awards.
  • Investment News examines how Personal Capital plays into the online-advice space.
  • The Washington Post surveys HelloWallet’s business model.
  • RobotDough.com announces its student financial writing competition.
  • Silicon Angle compares the 3 iPad apps launched last week: Wikinvest, Pageonce, & Mint.
  • Q2ebanking discusses mobile-banking security in Credit Union Times.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.