Marketplace lending (also commonly named P2P lending) is an emerging form of Fintech, which focuses on more efficient and thus less costly lending process, particularly toward individuals, SMEs, or those borrowers who are largely ignored or discriminated by conventional lending process. Lending Club as a reasonably successful marketplace lending Fintech company, offered a glimpse for us to better understand the market trend behind this type of Fintech companies and how they experimented/struggled to a publicly listed company. Please bear in mind that although China has thousands of so-called “P2P” companies, careful reading/research on Lending Club will reveal many obvious/subtle differences. When you answer case questions or join our in-class discussion, please be cautious to simply throw out your observations/lessons learned in China to the Lending Club case. This will be an extremely tricky test for some of you or test of thinking beyond what you know in the past.
•What was the market opportunity that the founders of Lending Club were trying to capture? Please be aware of the specific context and avoid the China bias or your knowledge learned from China.
•What was the business model of Lending Club as of the publishing date of this case? Can you briefly explain it (e.g. with business model canvas or another popular tool)?
•Please apply one specific analytic skill that you learned or will learn to a possible task that Lending Club will engage. Explain the task, how you proceed with what variables, what model, and what analytics to help with the proposed task.
•Can you show another contemporary Fintech company that follows a similar business model like Lending Club, local or global? Please briefly describe the key similarities.
•What is the key challenge(s) facing Lending Club NOW? Please provide specific argument(s) and specific evidence.
2: Quantopian & eToro
Historically hedge funds are actively players in trading (e.g. equities). Over time, the barriers to enter hedge funds for either semi-professionals or individuals become higher and higher in terms of data access, entry fee and knowledge spillover. For example, most hedge funds will demand an entry fee of 1 million USD (or RMB in China) and higher. Besides, a 1-2% annual management fee will be charged from the investment principal regardless the investment performance. Quantopian and eToro cases show how new Fintech startups can tackle on the conventional business model of hedge funds with their own unique approach towards their target markets. Again, both cases have their imitators in China. Again, please be cautious when you throw out examples from China since we have to be mindful of both similarities and differences between China and US. We will address and summarize the key differences in our last session when we focus on China Fintech. To save time, I will list questions for eToro but you can imagine a similar group of questions for Quantopian as well.
•What was the market opportunity that the founders of eToro were trying to capture initially? Please be aware of the specific context.
•What was the current business model of eToro? Any special items that you can identify from its current business model?
•Can you briefly describe what analytic skill that eToro can adopt (or has adopted) to cope with increasing competition? Please provide specific names and how to apply it to a real task.
•What could be the challenges that Fintech firms such as eToro are facing from a regulation’s perspective?
•Surprisingly social trading service became real in Hong Kong just recently but already tens of startups worked in this domain in mainland China. Can you briefly discuss whether eToro’s model can exist and prosper in Hong Kong or Mainland China? Show your argument and evidence.
Sample Solution
