Yet Another Association for Marketplace Lending Launches

  • JJ Hornblass
  • May 6, 2016
  • 3

canstockphoto7572151That’s what the industry needs: competing marketplace lending associations.

Today, the three big names in marketplace lending (for now — more on that below) that were not in the just-launched Marketplace Lending Association have formed the Innovative Lending Platform Association.

This is Funding Circle, Lending Club and Prosper Marketplace of the Marketplace Lending Association vs. OnDeck, Kabbage and CAN Capital of the Innovative Lending Platform Association.

The former “will advance the marketplace lending industry,” while the latter “is focused on advancing small business online lending education, advocacy, and best practices.” It is unclear whether there will be a subsequent back-alley rumble.

In all seriousness, this is a poor turn of events for fintech. Nothing beneficial comes from a discordant industry, even if superficially the argument will be that the Marketplace Lending Association will have a consumer credit bent, as opposed to Innovative Lending Platform Association’s lean toward small business lending. That the two associations were launched exactly one month apart evidences either insufferable egos or an inability to simply play nice.

It should be added that these association are popping up because of a simple truth: the Consumer Financial Protection Bureau is coming. Last March, the CFPB began accepting complaints on marketplace lending, and a handful of submissions have been made. For example, nine complaints have been filed against Prosper. In at least one case, Prosper was forced to remit a fee it had charged on a loan made to a borrower in Georgia.

Despite these developments, new questions have surfaced regarding the overall viability of the marketplace lending model. OnDeck, for example, disclosed this week that it was markedly reducing its marketplace lending operation in favor of traditionally funded commercial finance, which is, it should be noted, already heavily regulated.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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