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LendingClub's Muted Outlook Spells Even Worse News for Upstart

LendingClub's Muted Outlook Spells Even Worse News for Upstart

The landscape has been quite challenging for financial companies over the past 18 months, as the Federal Reserve raised interest rates at a rapid pace, consumers were challenged by inflation, and the possibility of recession caused banks to increase their loan loss reserves, compressing net income. First, fintech companies are generally one- or two-product companies, as they are much earlier in their lifecycles than diversified big banks are. Second, there's a perception that fintechs may target a less creditworthy consumer, given that most fintechs tout new ways of underwriting clients overlooked or overcharged by traditional banks.