Marketplace Lending Pioneer LendingClub Forced to Cut 14% of Workforce Amid Reduced Demand and Interest Rate Increases

Summary:

LendingClub, a marketplace lending pioneer, announced plans to lay off 14% of its workforce, or 225 employees, due to reduced demand for its loans. The company cites the Federal Reserve’s historic pace of interest rate increases as the reason for the job cuts. This is not the first time that LendingClub has had to make significant cuts to its workforce. In April 2020, the company laid off 30% of its employees, or 460 people, blaming the “unprecedented effect” that the Covid-19 pandemic had on loan demand. Despite the ongoing challenges, LendingClub expects revenue of between $260 million and $263 million, with a net income of between $21 million and $24 million.

In a move that highlights the ongoing challenges facing fintech companies, marketplace lending pioneer LendingClub announced that it will be laying off 14% of its workforce, or 225 employees. The company cites reduced demand for loans as the reason for the job cuts, which are expected to result in annualized savings of between $15 million and $30 million in 2023.

This is not the first time that LendingClub has had to make significant cuts to its workforce. In April 2020, the company laid off 30% of its employees, or 460 people, blaming the “unprecedented effect” that the Covid-19 pandemic had on loan demand.

“These measures enable us to more closely align our expense structure to loan volume and revenue while ensuring effective execution against our strategic priorities and long-term vision.”

Despite the ongoing challenges, LendingClub remains optimistic about its future. The company originated $2.5 billion in loans in the fourth quarter and expects revenue of between $260 million and $263 million, with net income of between $21 million and $24 million.
Scott Sanborn, CEO of LendingClub, said in a statement, “These measures enable us to more closely align our expense structure to loan volume and revenue while ensuring effective execution against our strategic priorities and long-term vision.”

The layoffs at LendingClub are a reminder of the ongoing challenges facing fintech companies, many of which have been forced to make significant cuts to their workforce in the face of reduced demand and increased competition. The Federal Reserve’s historic pace of interest rate increases has also played a role in the struggles of fintech companies like LendingClub.

View Article Sources
  1. LendingClub response to COVID – LendingClub
  2. LendingClub vs. Best Egg: Which is Best – SuperMoney
  3. Personal Loans Industry Study – SuperMoney
  4. Best Personal Loans – SuperMoney