Step 1 of 4 · 2007 to 2014

A fixed repayment plan gave card borrowers a reason to apply

Launched in 2007, LendingClub offered online applications for loans with fixed rates and monthly payments. Investors could diversify across loan exposures in increments as low as $25. The company earned transaction and servicing fees; by its 2014 IPO filing, the platform had facilitated more than $5 billion in loans. LC1

For a qualifying borrower, replacing revolving debt with a priced installment schedule made the cost and end date easier to assess. For an investor, the platform handled selection tools and servicing that would be cumbersome to build for individual loans. These were two separate reasons to participate. Maintaining both depended on terms borrowers would accept and returns that kept investors willing to fund them.

Rivals Continuing to carry card debt and borrowing from a bank were borrower alternatives; bonds or other investments were investor alternatives. Prosper also offered marketplace loans, so the structure alone was not exclusive.

Step 2 of 4 · 2016

Investor withdrawal turned control failures into an origination constraint

In 2016, LendingClub disclosed sales of loans that violated an investor’s requirements and accepted founder Renaud Laplanche’s resignation. The company subsequently used $102.7 million of its own capital to support marketplace funding and provided investor incentives. Its annual report described a material weakness involving senior management’s control environment. LC2

The episode tested the claim that scale would make the marketplace self-sustaining. Borrower demand could not produce fee revenue if investors refused the loans. Restoring participation required capital and concessions as well as procedural repairs. The immediate problem was confidence in execution and governance; it should not be conflated with a claim that every underlying borrower had become uncreditworthy.

Rivals Investors could stop buying new loans or allocate to other lenders and securities. Unlike an automatically renewing captive funding source, marketplace participation had to be re-earned.

Step 3 of 4 · 2021 to 2025

Owning a bank added deposit funding and recurring loan income

LendingClub acquired Radius in 2021 and began combining a bank balance sheet with its marketplace. In his 2024 interview with Jim Marous, Scott Sanborn explained that ownership removed issuing-bank and warehouse costs and allowed the company to retain selected loans. The 2025 filing reports $9.8 billion of deposits and $625.7 million of consolidated net interest income. LC3 LC4

A deposit-funded balance sheet supplied another way to finance an approved loan when whole-loan buyers offered unattractive prices. Retention also spread earnings over the life of a loan instead of relying chiefly on an origination event. The tradeoff was substantive: owning the assets required capital, loss provisions and bank supervision. Conventional banks already had deposit funding, so the benefit was a change in LendingClub’s own operating choices, not an exclusive banking privilege.

Rivals The previous WebBank and external-funding arrangement remained the relevant alternative. Ownership changed authority over origination and loan retention; a commercial partnership alone would not provide the same balance-sheet control.

Vertical Integration Strategy

Step 4 of 4 · 2023 to 2026

The bank model still had to adapt to rates and compete for everyday use

Sanborn described another adjustment after the 2023 banking disruption: structured certificates let investors buy loan exposure while LendingClub retained senior securities. Approximately $8 billion of loans had been sold through the structured program by the end of 2025. In June 2026, the company launched Happen Bank and the parent began trading as HAPN. Its connected checking offer rewarded qualifying on-time loan payments. LC3 LC4 LC5

The structured program addressed funding demand without requiring the company to hold every loan outright. Checking and savings offered a separate path to contact between borrowing occasions. Both developments extend the original installment-loan relationship, but their economics differ: securitization depends on investor pricing, while an everyday account must win against other banks. More control over funding made adaptation possible; it did not remove the need to price risk or keep deposits.

Rivals Whole-loan sales, outright retention and structured sales allocate risk differently. Competing banks also pay for deposits and offer linked-account rewards.