Parting thoughts: alternative data and the future of lending

Spencer Bryan
Jul 25, 2017 · 2 min read
Photo by Michał Grosicki on Unsplash

After 3.5 years at Lending Club, I recently left to pursue my dream of starting a business. More on that to come.

But for now, I want to take a moment to praise Lending Club and highlight how much good their model can accomplish.

For those not familiar, Lending Club is an online marketplace that connects those in need of a loan with sources of capital across the spectrum — everything from individual investors to larger institutional investors. A key differentiator beyond this marketplace model is in the novel ways that Lending Club uses data in credit underwriting.

A large part of my role centered on the implementation and use of alternative data sources to improve the underwriting experience and outcomes for loan applicants. Working with a brilliant group of data scientists, engineers, and designers (and many others), we built the technology and user experience that enabled us to access and use powerful new data sources.

Those new capabilities played a large part in our ability to extend affordable credit to those who would typically have a difficult time accessing it, without incurring any additional risk of default, and ultimately allowed Lending Club to say “yes” to more deserving people. That is an accomplishment of which I’m quite proud.

Some of these efforts have begun to prove themselves out in the real world. A paper released earlier this month by the research arm of the Federal Reserve confirmed that “the use of alternative information sources has allowed some [Lending Club] borrowers who would be classified as subprime by traditional criteria to be slotted into ‘better’ loan grades and therefore get lower priced credit.”

Fundamentally, modern lending is a complex exercise in data-driven judgment of (often vulnerable) people. Lending Club is in an incredibly strong position to realize the positive impact that these alternative data sources can have on those people that need it most.

To the team at LC, thank you for everything. I’ll be rooting for you.

For anyone that wants to talk about ideas or just connect in general, feel free to reach out.