personal loans - connecting the global online lending...

1 Proprietary & Confidential1 Proprietary & Confidential

Personal Loans:The Keys to Success in a Competitive Market

Kenneth LinFounder & CEO, Credit KarmaMarch 6, 2017


To make financial progress

possible for everyone

Credit Karma’s Mission

3 Proprietary & Confidential

>1 Billion Free Scores

*Based on panel of active Credit Karma members in February

Net Promoter Score of >75*

>60 Million Members


Market trends


Online lenders have grown the personal loans market

Source: CK analysis of member tradeline data, as of 1/14/17.

Total Quarterly Personal Loan Originations, by Type of Lender

■ Finance ■ Credit Union ■ Bank ■ Online Lender


But have recently been losing share to traditional lenders

Source: Equifax Ignite Platform, as of February 2017.

■ Finance ■ Credit Union ■ Bank ■ Online Lender

Percent of Quarterly Personal Loan Originations, by Lender Type


In part due to increasingly less competitive APRs

Bank

CreditUnion

Online Lender

Ave

rage

Wei

ghte

d A

PR

Average Weighted APR for >640 36 mos Personal Loans, by Lender Type

Source: Equifax Ignite Platform, as of February 2017. Weighted average interest calculated as APR multiplied by initial loan amount (in dollars).


Driven by higher default rates

Vantage3 Score

18-M

os D

elin

quen

cy R

ate

18-Mos Delinquency Rate for 36-Mos Personal Loans, by Score

■ Online Lender■ Credit Union ■ Bank



Especially for recent vintages

Loan Vintage

18-Mos Delinquency Rate (90+ DPD) for 36-Mos Personal Loans

■ Online Lender■ Credit Union ■ Bank



Even when controlling for score

Vantage3 Score

Performance of Online Lender 36-Mos Personal Loan Originations, by Vintage● 2014Q1● 2014Q2● 2014Q3● 2014Q4● 2015Q1● 2015Q2


18-M

os D

elin

quen

cy R

ate

(90+

DPD

)


Keys to success


See these dynamics play out on Credit Karma


■ Bank ■ Credit Union ■ Finance ■ Online Lender

% Quarterly Personal Loan Originations, by Lender Type


Key 1: Win on mobile

Change in Total > 760 Originations, by Lender Type (indexed to Q1 2014)

Source: CK analysis of member credit reports and activity across platforms, as of 1/14/17.

■ Bank ■ Credit Union ■ Online Lender


80% of CK users are active on mobile

Source: Internal CK analysis, as of January 2017.

Monthly Active Users, by Platform


And are shopping for personal loans on mobile

Source: Internal CK analysis of personal loan originations, as of January 2017.

% CK Personal Loan Originations on Mobile


Key 2: Continuously refine underwriting18-Mos Delinquency Rate (30+ DPD) of June 2015 36-Mos Personal Loans

(n=36648, data as of 1/17)

Source: CK analysis of member tradeline data + platform originations, as of January 2017.

■ Online Lender■ Bank ■ CK Originated ■ Credit Union


with additional, alternative data sources

Source: Internal CK model, as of January 2017. Model built on customers in score range 550-559, who returned after 12 months

CK Behavioral Model Performance


Key 3: Solve real consumer pain points with certainty

43% approval rate

Source: Internal CK analysis of personal loan originations, as of January 2017.

2016 Personal Loan Application to Approval Rate


transparency

Source: Internal CK analysis of member tradeline data, as of January 2017.

2016 36-Mos Personal Loan Originations, Random Sample (n=10,000)


and simplicity

Number of questions asked in loan application

Source: Internal CK analysis, as of January 2017.


Thank You

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