Marketplace lending association swells its ranks

By Ryan Weeks on Friday 20 January 2017

Alternative Lending

Crop of new platforms and sector specialists join marketplace lending association in US.

The Marketplace Lending Association (MLA), which was founded by Lending Club, Prosper and Funding Circle in April 2016, has on-boarded nine new member platforms, in addition to a pair of associate members. Affirm, Upstart, CommonBond, Avant, PeerStreet, Marlette Funding, Sharestates, Able and StreetShares have all signed up, while data analytics firm dv01 and conference organiser LendIt join as associate members.

The marketplace lending association formed in April 2016, just a few weeks prior to the low-point in what proved to be a turbulent year for the industry. Former Lending Club CEO Renaud Laplanche was fired in May, prompting a crisis of confidence across the sector. A few months later, the MLA appointed Wall Street veteran Nat Hoopes (pictured above) as its executive director. Hoopes was appointed to represent the industry in Washington, and said at a conference in September that policy-makers were “cautious to disrupt an industry which helps ordinary people”.

The Obama administration published a report on fintech earlier this week, making four recommendations, which included the need to foster “positive financial services innovation and entrepreneurship”.

"On behalf of the founding members, I welcome these new members to the Association and I look forward to working with them to advance our mutual public goals both in Washington and in state capitols around the country," said Hoopes. "As MLA member companies continue to innovate and create new opportunities for borrowers and investors, the MLA will play an important role in sharing data and insights that help educate policy makers on the benefits that these companies bring to consumers, businesses, and our financial system."

The MLA’s new members represent a change of tack for the organisation, one which had been hinted at by Hoopes at the AltFi Global Summit last September. The membership now spans student loan refinancing and real estate, in addition to consumer and small business lending. There is also a greater variety of funding structure encompassed, with some of the new members – like Avant – holding loans on balance sheet.

This may create tension between the MLA and the innovative lending platform association (ILPA), which was formed by cornerstone members OnDeck, Kabbage and CAN Capital last May. This organisation might have seemed to some the more natural fit for other balance sheet lending members, but the ILPA is tailor-made for small business lenders. It recently pioneered its SMART Box initiative, a tool designed to bring greater transparency to the SME lending space.

The proliferation of representative bodies in alternative finance is doubtless in part driven by the year just passed, during which industry sentiment – in the mainstream media in particular – turned sour. More collaboration and the setting of standards should help to prevent a similar set of events unfolding in 2017.

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