- Brian Ach/Getty
Online lenders operate in a different realm than that of traditional banks, and big data is a big part of that.
Speaking at The Economist’s Buttonwood conference in Midtown Manhattan on Tuesday, Lending Club CEO Renaud Laplanche explained the factors that went into determining creditworthiness online.
“We don’t know what our customers look like,” Laplanche said at the event.
Speaking with Business Insider after his on-stage appearance, Laplanche said determining the fraudulent applicants from the real customers was a key part of Lending Club’s business model.
And the company uses all types of data to determine real consumers from fraudulent profiles and to figure out which applicants are creditworthy.
- Fraudsters use automated inputs to speed up loan applications online. The faster an application is being processed, Laplanche said, the greater the likelihood it is a bot and not an actual person.Timing is key. Laplanche said on stage that Lending Club’s ideal person to lend to was more likely to submit an application during regular business hours. If someone applies for a loan at 3 a.m., the person most likely poses a higher risk. The browser and email service you use could make you a greater liability. Laplanche wouldn’t say, however, which browsers and email addresses were most suspect. Because business loans are regulated differently from consumer loans, Lending Club can factor Yelp reviews and Google search trends to determine creditworthiness for small businesses. Watch the caps lock! Another lending-industry executive, who asked to remain unnamed, said his firm determined that consumers who filled out applications IN ALL CAPS had a higher likelihood of default.
That said, this checklist could change entirely before the year is up. Laplanche said “hundreds” of factors like the ones above go into determining applications – not just consumers’ credit scores.
“Every six months we build a new underwriting model,” he said.