Personal Loans: Competitive Landscape

Part
01
of two
Part
01

Personal Loans: Credit Karma, Nerd Wallet

The requested information about the personal loan companies Credit Karma and Nerd Wallet and how they compare against each other is presented below and in the attached spreadsheet.

Credit Karma

  • Credit Karma is a U.S. multinational personal finance company, headquartered in San Francisco. It was founded in 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard.
  • Credit Karma was valued as a $4 billion company in 2018.
  • The company provides credit cards, free credit score, personal loans, home loans, auto loans, auto refinancing and insurance services, and tax filing on their website and apps to their customers.
  • Since Credit Karma is a free website, it does not charge anything from its customers. However, when a customer takes a personal loan from a lending agency as per Credit Karma's advice, Credit Karma gets a commission from the said lender.
  • Since their founding in 2007, Credit Karma has received a lot of financial backing and funding from their investors. They have made a lot of acquisitions from 2015 to 2018 and expanded their business to the U.K. They also have launched Credit Karma Savings and Credit Karma Tax in the U.S.

Nerd Wallet

  • Nerd Wallet is a U.S. personal finance company, headquartered in San Francisco. It was founded in 2009 by Tim Chen and Jacob Gibson.
  • Nerd Wallet was valued as a more than $500 million company in 2018. The exact figures are however not available in the public domain.
  • The company provides credit cards, free credit score, mortgages, savings account, online brokering, and personal loans on their website and apps to their customers.
  • Since Nerd Wallet is a free website, it does not charge anything from its customers. However, when a customer takes a personal loan from a lending agency as per Nerd Wallet's advice, Nerd Wallet gets a commission from the said lender.
  • Since their founding in 2009, they have only received a total funding of $69 million from their investors. Consequently, they have not been able to make a lot of acquisitions and moves in the personal finance market. Also, they had been hit hard by the worldwide economic slowdown, hence they had to release 40 employees in 2017 in which was also their VP of Growth Henry Hsu.

Research Strategy

For our research, we conducted an extensive search of both Credit Karma and Nerd Wallet's websites, news articles, public interviews, external market reports for any information related to their personal loan sector and overall expansion plans and upcoming strategic initiatives. For both Credit Karma and Nerd Wallet, there is not much public information about their personal loan sector. Both these websites are free and provide free credit scores and recommendations for personal loans to their users who then decide which lending company to borrow from. For their service, both these companies receive an undisclosed commission from the lending agency from which the customer has borrowed their personal loan. Since the personal loan transaction is essentially being done by the third-party lending agency and both Credit Karma and Nerd Wallet play the role of brokers, they do not share a lot of data regarding personal loans on their websites and in the public domain. Hence, we expanded our search outwards to cover their overall personal financing business in general.

While we could find a lot of public information about the expansion plans, upcoming strategic initiatives, and the development of technology of Credit Wallet, which has risen to become one of the major firms in the personal finance industry, we could not find much corresponding public information about Nerd Wallet. The first major reason for this is that Nerd Wallet has not been able to get a lot of funding from their investors, unlike their competitor Credit Karma. Secondly, the global economic slowdown has hit them hard resulting in a lot of layoffs and their not venturing out of the U.S. market. This has made the company conservative in their expansion activities and guarded in their approach. However, we have presented the available information in the research as well as in the attached spreadsheet.
Part
02
of two
Part
02

Personal Loans: Bankrate and LendingTree

The requested information about the personal loan aggregator companies Bankrate and LendingTree and how they compare against each other is presented below and in the attached spreadsheet.

Bankrate

  • Bankrate, Inc. is a limited liability (LLC) financial services company that researches, aggregates, publishes, and distributes personal finance content on their various online platforms as well as through their print, publishing, and licensing division.
  • Bankrate, Inc. aggregates financial information from more than 4,800 financial institutions on over 300 financial products and displays the information on their online and print platforms. They cover almost 600 local markets in all the 50 states of U.S.A.
  • The company was founded in 1976 by the journalist Robert K. Heady in Miami Beach, Florida. Bankrate, Inc. was incorporated in Delaware in 2011. The current President and CEO is Kenneth Esterow.
  • The online portfolio of Bankrate, Inc. includes the websites Bankrate.com, CreditCards.com, and Caring.com, among others. Among these, Bankrate.com is their flagship website and operates in both U.S.A. and U.K. Bankrate.com was founded in 2011 and their HQ is in New York City.
  • The U.S. website of Bankrate.com provides services such as mortgage loans, personal loans, home equity, home insurance, car insurance, credit cards, savings accounts, and Certificate of Deposit (CD) accounts. The U.K. website only deals with mortgage services.
  • Since Bankrate.com is a free, independent, and advertising-supported website, they do not charge anything from their customers for providing their services. However, Bankrate gets a commission from a third-party lending agency when a customer avails any product or service, such as a personal loan, from that lending agency by clicking on the advertisement or link placed on Bankrate's website. Essentially, Bankrate functions as a broker between the lending agency and the customer.
  • In 2017, Red Ventures, an American marketing company, acquired Bankrate, Inc. in an all-cash transaction for $1.24 billion. This placed Bankrate's market evaluation at $1.4 billion. Since this acquisition, Red Ventures have remained tight-lipped about Bankrate's future expansion plans and strategic initiatives.

LendingTree

  • LendingTree is U.S.A.'s largest online lending marketplace in terms of customer experience.
  • The company was founded in 1996 by the current CEO and founder Doug Lebda. The company is headquartered at Charlotte, North Carolina.
  • LendingTree connects borrowers with a host of lending agencies so that they can choose products and services customized to their needs. They also provide financial education to their customers about their credit needs.
  • The online portfolio of LendingTree includes the websites LendingTree.com, CompareCards.com, DepositAccounts.com and MagnifyMoney.com, among others.
  • The LendingTree.com website provides services such as home loans, personal loans, student loans, auto loans, business loans, credit cards, insurance, debt relief, debt consolidation, credit repair, and banking products like savings accounts, checking accounts, IRA accounts, money market accounts, and Certificate of Deposit (CD) accounts.
  • Since LendingTree.com is a free, online loan marketplace, they do not charge anything from their customers for providing their services. However, LendingTree gets a commission from a third-party lending agency when a customer avails any product or service, such as a personal loan, from that lending agency by clicking on the advertisement or link placed on LendingTree's website. Essentially, LendingTree functions as a broker between the lending agency and the customer.

Research Strategy

For our research, we conducted an extensive search of both Bankrate and LendingTree's websites, news articles, blogs, and external market reports for any information related to their personal loan sector and overall expansion plans and upcoming strategic initiatives. For both Bankrate and LendingTree, there is not much public information about their personal loan sector. Both these websites are free, independent, and advertising-supported websites. They do not charge anything from their customers for providing their services, but they receive an undisclosed commission from the lending agency from which the customer has borrowed their personal loan based on these websites' recommendation. Since the personal loan transaction is essentially being done by the third-party lending agency and both Bankrate and LendingTree play the role of brokers, they do not share a lot of data regarding personal loans on their websites and in the public domain. Hence, we expanded our search outwards to cover their overall personal financing business in general.
Even though we searched extensively, we could not find a lot of public information about the future expansion plans and upcoming strategic initiatives of both Bankrate and LendingTree because of several reasons. Ever since Bankrate has been acquired by Red Ventures, the parent company has remained tight-lipped about their future expansion plans and strategic initiatives. As for LendingTree, they are keenly looking at the personal loan market which has risen according to their 2018 Fourth Quarterly Report (which was released on Feb 2019). As such, they too have not released any strategic initiatives so far. The 2019 final quarterly report will be released on February 25, 2020, hence it is hoped that it will contain some new strategic initiatives. In spite of the above roadblocks, we have presented whatever public information is available in the research as well as in the attached spreadsheet.
Sources
Sources