After the Fed raised interest rates earlier this month, I received a lot of questions about what effect the move will have on the fintech industry. Peer-to-peer lending platform Lending Club [NYSE: LC] yesterday offered one answer.
Lending Club, which went public late last year, announced Tuesday it will raise interest rates on new loans by an average of 0.25%.
Since many credit card issuers increased rates by the same amount, the company is not concerned it will push away borrowers. Lending Club CEO, Renaud Laplanche, expressed that higher rates for borrowers will not slow down the platform’s growth. In a statement in the Wall Street Journal, Laplanche said:
There has been noise about competition for borrowers, but that’s been the case for smaller platforms competing hard in obvious channels. We’ve had better marketing efficiency every single quarter since we went public.
While there’s no word yet if other alternative lenders will follow Lending Club’s lead on raising rates, Laplanche plans to move Lending Club’s policy “in lockstep” with the Fed’s rate changes.
Earlier this fall, Lending Club extended multi-draw lines of credit to its small-business borrowers, enabling them to withdraw funds only as needed, instead of one lump sum. At BAI’s Global Banking Innovation Awards, the company won accolades for Most Innovative Non-Bank Financial Services Organization.
The company went public in December 2014. The market cap is at $4.32 billion. Lending Club debuted at the first Finovate in 2007.