One of the more hopeful consequences of the 2008 financial crisis has been the growth of a group of small companies dedicated to upending the status quo on Wall Street. Bearing cute, Silicon Valley–esque names such as Kabbage, Zopa, Kiva, and Prosper, these precocious upstarts are tiny by banking standards, and pose no near-term threat to behemoths like Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America, or Citigroup—banks that between them control much of the world’s capital flow. But there is no question that these young companies have smartly exploited the too-big-to-fail banks’ failure to cater to the credit needs of consumers and small businesses, and will likely do so more noticeably in the years ahead.
At the forefront of the group is Lending Club, a San Francisco–based company founded in 2007 by Renaud Laplanche, a serial entrepreneur and former Wall Street attorney. Laplanche, 43, grew up in a small town in France and, as a teenager, worked every day for three hours before school in his father’s grocery store. He also won two national sailing championships in France, in 1988 and 1990. Now an American citizen, he created Lending Club after being astonished at the high cost of consumer credit in the United States. Lending Club uses the Internet to match investors with individual borrowers, most of whom are looking to refinance their credit-card debt or other personal loans. The result is a sort of eHarmony for borrowers and lenders. Lending Club has facilitated more than $4 billion in loans and is the largest company performing this sort of service, by a factor of four.
