Technological Changes at Lending Club

For those who don’t know, one of the premier peer-to-peer lending sites out there is Lend Academy. Peter Renton, editor of Lend Academy, has just posted two great posts highlighting the changes that have just been made at Lending Club. Highlights of his two posts are found below, as well as links to his site. I encourage everyone with accounts at Lending Club to check out these posts by Peter and the changes that have been made.

Slight improvements with Foliofn

As someone who no longer uses Foliofn, I am slightly out of touch with some of the immediate needs of those users besides better filtering options. Previously there really weren’t many options available (just three) and Lending Club has made some slight improvements. Below is a screen shot of the new filtering options available:

Lending Club Updates - Foliofn Additional Filters

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Additionally, all users now have the ability to download the entire current listing of notes on Foliofn which should help those individuals actively investing or selling notes on this platform. The final major change is the inability to sell any notes that are currently processing a payment. This change closes the loophole that many investors were exploiting in order to take advantage of a note that was about to go late. I know many investors who have taken advantage of this to increase their returns while dumping poor performing notes.

These are just the highlights of some of the changes to Foliofn, and I would highly recommend you check out Peter’s post on these updates.

Adjusted Net Annualized Return (NAR)

More relevant to most investors is the change on the home screen of your account, with Lending Club rolling out a new feature, adjusted NAR. Historically, NAR has been flawed in that it only takes a picture of your returns to date, without accounting for any potential losses and idle cash. With this latest update, Lending Club has provided to opportunity for each investor to show an adjusted NAR or the traditionally calculated option.

Utilizing historic performance, Lending Club has approximated the loss of capital for the varying stages of late or defaulted loans, and factored these reduced amounts into your NAR. In changing your shown NAR (see mine below, before and after), the account value is also changed to reflect the estimated principle that will be lost as a result, net of the projected recovery rates. You will notice the updated areas highlighted in blue in the after shot shown below.

Lending Club Updates - Adjusted NAR - Main Screen Before

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Lending Club Updates - Adjusted NAR - Main Screen After

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While I have held no regard for NAR as a reasonable means of measuring my performance, going forward for all updates that occur after this change, I will show by my adjusted NAR. I will however still keep track of my actual internal rate of return as calculated by Excel’s XIRR function, and will make mention each month of my traditional NAR.

Again, as with the update to Foliofn, I highly recommend each of you to check out Peter’s post on this particular update. Peter has the inside track on many of these changes and has prepared a fantastic post detailing all of the nuances of this particular change as well.

My Thoughts

So there we have it, lots of updates and changes within Lending Club. While I personally am looking forward to them upgrading their internal filters to make them free form, as well as developing an automated investment option like Prosper, progress is progress and we can be grateful of that. I am glad to see both Lending Club and Prosper responding to investors demands, no matter how long overdo. Between these changes mentioned above, and the fantastic interview by Simon at Lending Memo with Aaron Vermut, President of Prosper, things are moving forward quite well within the peer-to-peer lending world.

What are your thoughts on the changes? Do you like them? What changes are you looking for at Lending Club or Prosper?

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  1. I do like the changes. The more knobs I have to turn (I’m thinking filters mostly), the more I can play and tweak.

    Lending Club really, really needs an automated investing option though. I’ve checked out some of the pay services and they are just too expensive for my small time action.

    • I completely agree and understand in regards to the pay services. That beings said, if you were to allocate that $50-100k you have talked about, they might become more reasonable. Ultimately though, I completely agree they have dropped the ball on the automated investing. There are some tremendous challenges to overcome with the automation such as how to “line up” the orders without anyone butting in line. Really like dealing with kindergarteners, but with $25 investments. There would need to be a ticketing system or something to allow people to get their fair share. Not the easiest process in the world unfortunately.

      Thanks for stopping by Mr!

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