Lending Club Data Changes Cause 3rd Party Tool Headaches

Screen Shot 2014-06-20 at 5.31.52 PMThere has been quite the discussion brewing over on the Lend Academy Forum about a recent change from Lending Club. I think it’s important to point out this recent change as they affect some of the third party tools that I feature on the blog. In a nutshell, the change is that instead of tools being able to constantly get up-to-date data from the CSV file right at release time, it is now only updated once every minute.  For those that don’t know what a CSV file is, it is simply a text file which includes organized data – in this case all of the available loans. You can read other forum member’s thoughts here.  What does this mean for third party tools? In the case of P2P-Picks – a lot.

The information contained in the CSV file paint a much more detailed picture of a borrower, much like the API.  P2P-Picks used this data to run their model against available loans, which gave them a slight time advantage for processing and ranking.   The result of this change is unfortunate given the way P2P-Picks has to do business.   The data from the API already lagged behind which means that third party tools that do not utilize the CSV are not affected.

Today, Bryce of P2P-Picks announced that his Lending Club picks would be paused:

In mid-June, LendingClub made some changes such that users of its website received access to new loans substantially more quickly than users of its API. As P2P-Picks is reliant on the API to automate its processes, this information gap has caused pick volume to decline precipitously. Thus, we are suspending the picking process until LendingClub has made improvements that enable us to resume our practices.

Personally, I have noticed a huge change in the amount of loans that I have invested in with P2P-Picks.  I relaxed my filters and still was lucky if I picked up one note at release time.  As I side note, Bryce also mentioned that he is working towards Prosper support which I’m very excited about.  You can be sure I’ll be testing it out and documenting it here on the blog once it’s available.

So who does have the advantage now?

Users who manually pick loans now have a slight advantage to grab notes before any third party tools pick them up.  Additionally, the fastest way to now gather information on recently listed notes (albeit less detailed information) is to aggregate it with screen scraping.  The shopping cart trick is another way that users would be able to get access to these fresh loans.  This involves adding many notes to your order and subsequently reviewing and then discarding notes that don’t meet your criteria.

I recently wrote about Third Party Automation vs. Lending Club Automation (Previously known as Prime) to help investors understand the differences.  There is something to be said about an even playing field as far as the availability of data, but it’s hard to say the actual reason that this change was made.  It might be related to Lending Club wanting to ensure that users using their baked in automation tool have a fair shot at getting loans at release time.

Scott Sanborn of Lending Club stated in his podcast with Lend Academy that he does not want to reward investors with the fastest computers, so I wouldn’t be surprised to see more changes.  This could be a big deal for third party tools that focus on speed as their primary means of adding value towards investors.

Please feel free to share your thoughts in the comments section below.

Comments

  1. wpscott says

    Liked TS post and BM follow up explained in a similar way.
    http://www.lendacademy.com/forum/index.php?topic=2376.45
    TS: “The only way to really correct this problem is to remove the race condition. Everyone should be able to select notes to ‘buy’ with successful purchases assigned at random after like… an hour. That’s probably not as good a deal for automation people like us… since we’d have to compete with point-and-clickers, but this debate would end.”
    BM: ” I particularly like the gentleman’s suggestion of allowing loans to be over-filled and then randomizing the fractions a couple hours after they hit the site. This would eliminate speed plays. It would also provide LC very good information about which loans may be priced incorrectly, which they could in turn use to improve their operations.”

    • says

      I am anxious to see how this all gets sorted out and some forum members certainly had some interesting thoughts. For now, I am adding filters to keep my money invested. P2P-Picks was what I used for nearly all my note selection.

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