Lending Club Removes Data Fields from Loan History and the API

In a surprise announcement yesterday Lending Club sent notice that it has decided to make some changes to the data available to investors. Anyone who uses the API received this email yesterday:

Dear Investor,

Today, we have implemented some changes across the Lending Club platform that are reflected in some of the downloadable files, and may impact some of your API programming to the degree you reference these fields.  Specifically, we have standardized date references and have removed some fields from the files relating to credit attributes.  You may read more on these changes at this page in the Knowledge Base.

This announcement came completely out of the blue and will certainly impact many investors who use the API to buy notes on the Lending Club platform. Given the fact that this data has also been removed from the data download of the loan history it will also impact analysis that investors have done.

Summary of These Changes

  1. The data download has gone from exactly 100 fields down to  56 – the list of the deleted fields is available in the Knowledge Base.
  2. These same fields have been removed from the API so any credit models or filters built on these 44 fields will soon no longer work.
  3. Date fields are now in a Month-Year format rather than a specific date – you will no longer know the exact date loans were issued.
  4. Policy Code 2 loans are now no longer available in the data download – this was not mentioned in this change but they are now clearly missing from the download.

So, we have a number of data fields no longer available and a large number of loans that have completely disappeared from public view. But it is the missing data fields that has caused the most concern from what I have been hearing over the past couple of days.

There are many large investors who have built credit models based on these additional data fields. There are also many small investors who have been using these data fields on Nickel Steamroller to create filters to invest through the API. In both instances changes will have to be made to continue investing.

In my own company, Lend Academy Investments, we have a fund that uses an advanced credit model to choose loans and when we spoke with our analyst today he told us that the model would have to be completely redone. There are many other large investors in the same boat.

The Thinking Behind the Changes

I reached out to Lending Club immediately when I heard this news but as I expected they had no comment. But I did some digging and sources tell me there were two reasons behind these changes. One, Lending Club wanted a level playing field between retail and sophisticated investors so that every investor had the same dataset in order to make investment decisions. Two, they did not want to make such a full dataset available to their competition.

I am not buying the first reason. If you really wanted to make the same dataset available to all investors they could have simply increased the number of fields available in the web interface. Having a simple Advanced button bringing up a new window with these fields would have been a far more equitable solution in my opinion.

Which leaves us with the second reason. Certainly, Lending Club, as a soon to be public company, needs to make decisions in the best interests of their shareholders. So this maybe the primary reason for the changes. Indeed, I have heard from many startups in the past who have said they have used the Lending Club or Prosper data to help build their credit scorecard. But I have also heard the Lending Club management talk about how sophisticated their model is now and how difficult it would be for any startup to create something similar from scratch.

My Take: Reduced Transparency is Bad for the Industry

It is pretty obvious by now that I don’t like these changes. For quite some time now Lending Club has been reducing the amount of transparency for investors. Now, some changes I completely understood such as removing the Q&A with borrowers and even the removal of loan descriptions. But removing data that investors have been using to make investment decisions is a step too far in my opinion.

I think Lending Club need to ask themselves if they are a true marketplace connecting borrowers and investors in a transparent fashion or whether they are more of a loan origination platform that makes products available to investors. They are certainly moving more towards the latter, I think, and that is a shame for everyone.

Now, anyone who has been around here a while will know I have been and continue to be a big supporter of Lending Club. But I also want them to know that these changes are not welcomed by many in our community. There has been a lot of negative talk about this change on the Lend Academy Forum and for once I agree with much of the negative sentiment. I just hope this trend of reduced transparency doesn’t continue and eventually investors are left with little or no information on borrowers.

The Importance of Dialogue

We will be adapting to these changes and will continue investing in Lending Club as I imagine most investors will. But I would like Lending Club to begin a dialogue with the community on changes like this. There are many people now, myself included, who make their living from this industry. And I would like to see Lending Club become more of a collaborative player here and think of themselves as a part of a broader ecosystem.

No one I have spoken to in the last 24 hours had any idea this change was coming. And regardless of the change that is not good for a collaborative and healthy ecosystem. Now, Lending Club in a quiet period right now so it may be understandable in this instance. But I hope this is the last time the ecosystem is blindsided by a change from Lending Club.

  • Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.