Lending Club and "The Long Tail"

Lending Club is a great example of a firm, which has benefited tremendously from the Long Tail concept. In the past, when a consumer wanted a personal loan, they would go their bank where they have their checking or savings account and rely on a bank’s credit rating model to get a loan. Lending Club has turned this model on its head and has build a new and an effective model that brings together a large number of investors to fund small loans to individual borrowers who need capital for a variety of personal needs. Crowd funding platforms such as Lending Club have become increasingly popular and have been steadily increasing their market share in a market that was previously dominated by banks. Lending Club alone has disbursed more than $1 billion of small loans within the past three years. These platforms cater to the financing needs of individuals and are able to spread the risk by giving a chance to hundreds of borrowers to fund a loan and guarantee better than market returns for such investments.