This year’s LendIt conference drew an international audience of over 5,000 to the Javits Center in New York City. An impressive number, really, considering 90% of the organizations represented didn’t exist five years ago. It’s clear that marketplace lending has matured, expanded, and diversified (with the exception of gender, as pointed out by a number of panelists). But kudos to LendIt for recognizing the sparsity of women in the financial technology (fintech) industry and incorporating a “Women in Fintech” luncheon this year. Also new this year was the LendIt Industry Awards Ceremony, a sold-out event recognizing leaders from across the fintech industry in a number of categories.
Moving Fintech Forward with AI (Really)
LendIt kicked off with Lending Club CEO Scott Sanborn addressing challenges that marketplace lenders faced in 2016 and discussing their desire to control and personalize the customer experience. The verification and fraud challenges they faced at the inception of consumer lending in 2007 have been replaced with new opportunities to expand into alternative products, which in turn have driven the growth of a $3 trillion industry leveraging robust technology and data.
Unlike some conferences, the sessions at LendIt 2017 were focused, insightful, and detailed. The panelists were willing to share a deeper look into their viewpoint on the marketplace and how their organizations approach everything from acquisition strategy, to credit modeling, to the use of artificial intelligence (AI). AI and machine learning were hot topics this year at LendIt, with a whole track dedicated to AI on Tuesday.
With a heavy focus on machine learning, AI is a natural progression for most large fintech companies. According to Mike Armstrong, President of ZestFinance, his company leverages AI because it can learn patterns and help identify them. AI can analyze many more variables than a human and allows for personalized engagement with potential clients. We’re intrigued by AI, and we’re looking forward to leveraging it with our clients as part of integrated acquisition, cross sell, and win-back marketing strategies.
Finding the Finance/Technology/Marketing Sweet Spot
Fortunately regulation is changing, which is allowing companies to embrace forward thinking and leverage new technologies. The mortgage industry in particular has been stuck in the “dark ages,” but organizations like SoFi have made huge strides in simplifying mortgage refinance and providing their clients with a more streamlined experience. SoFi differentiates themselves from other digital mortgage providers by offering a range of products that engage their clients throughout their customer lifecycle. They intend to provide the most customer-centric experience possible to ensure repeat business and low churn. With Net Promoter Scores (NPS) from 80-90, they seem to be on the right track.
A LendIt 2017 session by Dave Girourard, CEO of Upstart, explored the balance between finance and technology. He highlighted that credit in the United States is fundamentally mispriced, and consumers are paying for it. He shared that today, 83% of Americans who have access to loans never default. However, only 40% of Americans have access to Prime Credit. This steered Upstart to look at other borrower attributes and use machine learning to improve loan approval rates and lower default rates. Fintech organizations have learned that credit isn’t all it’s cracked up to be, and conclude that the entire borrower funnel should be evaluated.
There is a Magic Bullet for Fintech Marketing Response, and It’s Direct Mail
I attended an insightful discussion on “Consumer Lending Leaders of Tomorrow,” where panelists from MoneyLion, BorrowersFirst, Uplift, and LendingUSA reviewed their success with consumer acquisition. The panel observed that while there is a place for every channel, direct mail is the workhorse when it comes to acquisition with direct mail driving the vast majority of leads to their online platform. They’re seeing response rates of 0.5%-2.0% with no challenge to making the unit economics work.
As you can imagine, that’s music to our ears at IWCO Direct. Most lenders still face challenges integrating channels (such as email, social, and mail) to maximize response, but we know channel integration can provide some incredible lift to any marketing campaign. Next year, we’d love to see a session on best practices in direct response marketing through better channel integration.
Our entire IWCO Direct team, and our data partners who also attended, walked away singing the praises of LendIt. The conference’s planners delivered valuable content, key players, and an organized event, as promised. The founders of LendIt would probably agree with Scott Sanborn’s remarks during his opening keynote: “Walmart has resources Amazon can only dream of. But Amazon has dreams Walmart can’t resource.” I agree. When it comes to pushing your business further with direct marketing, you need to dream it to achieve it.
Safe to say, we’ll be at LendIt 2018 in San Francisco to see how the fintech space has progressed in achieving their dreams. Curious about anything else that went down at LendIt 2017? Drop me a line to find out more about what IWCO Direct learned at the conference and how we’re using it to power our clients’ marketing.
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