Wrap-Up of LendIt USA 2017 in New York

LendIt USA 2017 is now history. It was a great event, I think it was our best ever, it was certainly the largest with over 5,000 people in attendance. As I do every year here is my wrap-up of the event and some of my thoughts on what was shared.

For the fifth year in a row the CEO of Lending Club kicked off the conference with the opening keynote. The big difference was that this year it was Scott Sanborn delivering this presentation for the first time. He didn’t sugar coat the challenges Lending Club has faced in the past year but he is also didn’t dwell on them.

He compared the online lending industry with that of online retailing. He said that today parallels the time in the early 2000’s when online retailing was going through some early challenges. Back then we were going through the dot-com crash and many laughed at the idea that tiny Amazon could ever be a threat to the most successful retailers. Fast forward to today and Amazon was the first company to generate $100 billion in online sales and its online operations dwarfs that of Walmart.

But what was more interesting to me was when he said that Lending Club might take a leaf out of Amazon’s book and open up their platform. When Amazon opened up their platform to other retailers many thought they were crazy but according to Sanborn “today platform sellers make up half of their unit volume.” He implied that Lending Club might be willing to do the same thing and partner with companies to make their products available to Lending Club’s large customer base. This would be a huge departure and one that frankly I am quite excited about. He provided no details whatsoever but clearly he is thinking about some new initiatives for Lending Club.

Sanborn was followed by a fascinating discussion with Ash Gupta, the head of credit risk at American Express and something of legend in credit circles. Among one of the many interesting things he said was that machine learning and artificial intelligence for credit modeling have their limits and that human analysis is still needed to make the optimal credit decision. Good news for all the data scientists and underwriters out there.

The keynote track had many other popular sessions and on day one we heard from three leaders in government: Congressman Patrick McHenry (R-NC), Thomas Curry, the head of the OCC and Richard Cordray the head of the CFPB. Congressman McHenry talked about how important it is for government to encourage fintech innovation. It is going to become more critical as banks reduce their footprint in small towns – the only way for small business owners to access capital will be online.

Comptroller Curry focused on the OCC Fintech Charter. In particular, he defended his agency’s actions against the many attacks they have received on the charter. Director Cordray discussed the various CFPB initiatives around innovation including Project Catalyst and also the two recent requests for information that the agency issued.

On day two Alex Tapscott opened proceedings sharing how the blockchain is going to transform not just financial services but all of technology. There was an interesting conversation between Brett King, the founder of Moven and the host of the Breaking Banks podcast and the former CEO of Barclays Antony Jenkins. Jenkins, who now runs a technology startup, said that banks are going to continue to find it difficult to change and that legacy technology is not the only challenge. Adapting to change is not part of the culture at most banks. He also had this warning for financial services executives: they need to develop a deep understanding of technology, have the ability to reimagine the customer experience and be adaptable because the future will be nothing at all like the past.

Also on day two we had a fascinating presentation from IBM’s Watson Group. They have a very sophisticated artificial intelligence avatar they demonstrated – it could read facial expressions and understand the tone of the conversations then respond accordingly. Hardeep Walia of Motif made a big announcement about a new social impact initiative they have launched allowing people to invest according to their values.

For the first time ever the head of Marcus by Goldman Sachs, Harit Talwar, spoke publicly about the plans for their consumer lending platform. He talked about their use of direct mail, the importance of no borrower fees, why they view themselves as a tech company and why a human being will answer the phone within 10 seconds when a borrower places a call into Marcus.

I spent most of my time in the keynote sessions and there were so many other great keynotes that I am not mentioning here. We also had eight concurrent tracks going each day and many of these rooms were completely packed. I wanted to give a special mention to the Financial Inclusion track that I organized for the first time. It was very popular with standing room only whenever I check in on it. There was some vigorous debate in the “What is Responsible Online Credit” session which I think the audience appreciated. Also well attended was the Policy and Regulation track as well as the Credit and Underwriting track which seemed to have a line out the door every time I went by.

All the videos will be published within the new few days on the LendIt USA 2017 video page. As of this writing we have all the keynotes published as well as the Policy and Regulation track. All the tracks in the breakout rooms will be made available within a couple of weeks.

PitchIt @ LendIt 2017

We hosted the third annual PitchIt @ LendIt event, our startup competition, on day two. This event keeps getting bigger and bigger. This year we had 262 entries and the caliber of companies was outstanding. The eight finalists went through a training session with some experienced mentors on day one and then on day two they all gave their pitch on stage in a custom built theater on the expo floor.

There are two winners for PitchIt: a judges pick and an audience choice. When it was all said and done this year one company picked up both awards: Nova Credit. Congratulation to Misa Esipov, the CEO of Nova Credit and their entire team. Clearly, they had an excellent pitch this year.

The LendIt Industry Awards

LendIt USA 2017 culminated in an industry celebration – the first ever LendIt Industry Awards. We had 18 categories of awards and a select group of industry judges met a couple of weeks before LendIt to decide on the winners in each category. All the winners were awarded their trophies in a lively event held at the Edison Ballroom near Times Square on Tuesday night. The highlight of the night was probably seeing Scott Sanborn win Executive of the Year. I agreed with this choice as did all the judges – it was a unanimous decision apparently. Scott has done a great job in righting the ship at Lending Club and I think it is safe to say no one has had a more challenging year than him.

Here are some of the other key takeaways for me at LendIt USA 2017:

• There was a cautious optimism at LendIt this year, people were generally more positive than this time last year.
• Every platform knows they need to focus on profitability.
• Artificial intelligence is starting to permeate all areas of fintech.
• We need to be more active in Washington to make sure our message is heard.
• Banks are more open than ever to collaborating with fintech companies.
• Marketplace lending platforms need to expand their offerings to become more financially stable.
• The pace of change in the financial services industry is about to accelerate.
• It is not going to be easy but the opportunity in front of us is still huge.

We had a large expo hall this year with almost 120,000 square feet of exhibit space and nearly 200 companies showcasing their wares. We also had a 1-on-1 networking feature this year that resulted in several thousand short meetings taking place in a special area of the expo hall.

I spoke with probably around 200 people over the two days of LendIt and most people said it was a great event. That is how I judge our success, it is not what I think that matters but what others think. Now, of course, it didn’t go perfectly, there were some snafus along the way but I am confident when I say this was the best LendIt we have ever put on.

LendIt will be heading back to the West Coast again in 2018. We have booked the Moscone Center in San Francisco on April 9-11, 2018. Put it in your calendar now. As for the LendIt team our focus will now shift to China where the second annual LendIt China event (known as Lang Di Fintech) will take place on July 15-16. Then in the fall we will be back in London for LendIt Europe at the Intercontinental Hotel again on October 9-10.

Finally, I just want to do a big shout out to the LendIt team who have been so dedicated and have worked so hard to make LendIt USA 2017 a success.