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112233:
http://www.bizjournals.com/sanfrancisco/blog/techflash/2016/05/prosper-marketplace-for-sale-fintech-lending.html

loanuniverse:
I think this has a lot to do with the problems with LendingClub. The money might not be there to continue churning the loans unless they are a part of a bigger financial institution.

xraider:
If so, good riddance.

112233:

--- Quote from: xraider on May 27, 2016, 10:45:51 pm ---If so, good riddance.

--- End quote ---
hi!  nice to see you again!

havastat:
I think the problem is that as "P2P" lending has evolved, it has become much less P2P and much more automated banking. Communication between prospective investors and borrowers, once a critical feature, has disappeared. Prosper's original idea of having investers determine prices through an auction process turned out to be a disaster and was withdrawn. The process has become much more automated. Lending  Club once presented itself as a social network and floated the idea that people would be more likely to repay those they had a personal or social affinity with, but quickly dropped it. (I suspect in part because they realized that such an approach can have  nondiscrimination compliance implications).

Most of Prosper and LendingClub's deposits now come from large and sophisticated investors, and retail investors increasingly use algorithms or mutual fund like structures so that they deposit funds and somebody or something else figures out how to invest them. So functionally, "P2P" behaves nothing at all like the social network or interactive experience it was originally conceived to be. Today, investing and borrowing both work pretty much like putting ones money in or getting a loan from a bank.

This makes everything much more bank-like than it used to be, the process behaves in practice pretty much like automated banking. The process still has three advantages. It is more automated, less regulated, and has less overhead and per-transaction processing costs than a traditional bank (although costs have turned out to be higher than initially expected). These features would tend to make it attractive to a traditional bank. It could for example become such a bank's lower-cost retail loan affiliate.

LendingClub once had an additional advantage which has largely disappeared. It was the first to figure out a path through the regulatory issues, which were once formidable and tended to scare major players away. But you can't turn a path through regulatory issues into intellectual property, so anyone is free to follow and its very success has made barriers to new entrants lower. In addition, it's become apparent not all regulatory issues have been solved, and new ones have arisen adding new uncertainties that weren't perceived earlier.

The situation may turn out something like low-cost airlines. They started out ready to revolutionize the world. But after a while, some folded because actual costs were higher than they modeled, and major airlines bought out others  to become their low-cost divisions. They did have a major lasting impact, however.  The cost of air travel adjusted for inflation is much less today than it was decades ago. And no-frills service in Economy with added fees for extras has become the standard way all airlines now do business.

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