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Personal Loans:The Keys to Success in a Competitive Market

Kenneth LinFounder & CEO, Credit KarmaMarch 6, 2017

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To make financial progress

possible for everyone

Credit Karma’s Mission

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>1 Billion Free Scores

*Based on panel of active Credit Karma members in February

Net Promoter Score of >75*

>60 Million Members

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Market trends

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Online lenders have grown the personal loans market

Source: CK analysis of member tradeline data, as of 1/14/17.

Total Quarterly Personal Loan Originations, by Type of Lender

■ Finance ■ Credit Union ■ Bank ■ Online Lender

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But have recently been losing share to traditional lenders

Source: Equifax Ignite Platform, as of February 2017.

■ Finance ■ Credit Union ■ Bank ■ Online Lender

Percent of Quarterly Personal Loan Originations, by Lender Type

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In part due to increasingly less competitive APRs

Bank

CreditUnion

Online Lender

Ave

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d A

PR

Average Weighted APR for >640 36 mos Personal Loans, by Lender Type

Source: Equifax Ignite Platform, as of February 2017. Weighted average interest calculated as APR multiplied by initial loan amount (in dollars).

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Driven by higher default rates

Vantage3 Score

18-M

os D

elin

quen

cy R

ate

18-Mos Delinquency Rate for 36-Mos Personal Loans, by Score

■ Online Lender■ Credit Union ■ Bank

Source: Equifax Ignite Platform, as of February 2017.

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Especially for recent vintages

Loan Vintage

18-Mos Delinquency Rate (90+ DPD) for 36-Mos Personal Loans

■ Online Lender■ Credit Union ■ Bank

Source: Equifax Ignite Platform, as of February 2017.

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Even when controlling for score

Vantage3 Score

Performance of Online Lender 36-Mos Personal Loan Originations, by Vintage● 2014Q1● 2014Q2● 2014Q3● 2014Q4● 2015Q1● 2015Q2

Source: Equifax Ignite Platform, as of February 2017.

18-M

os D

elin

quen

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ate

(90+

DPD

)

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Keys to success

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See these dynamics play out on Credit Karma

Source: Equifax Ignite Platform, as of February 2017.

■ Bank ■ Credit Union ■ Finance ■ Online Lender

% Quarterly Personal Loan Originations, by Lender Type

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Key 1: Win on mobile

Change in Total > 760 Originations, by Lender Type (indexed to Q1 2014)

Source: CK analysis of member credit reports and activity across platforms, as of 1/14/17.

■ Bank ■ Credit Union ■ Online Lender

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80% of CK users are active on mobile

Source: Internal CK analysis, as of January 2017.

Monthly Active Users, by Platform

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And are shopping for personal loans on mobile

Source: Internal CK analysis of personal loan originations, as of January 2017.

% CK Personal Loan Originations on Mobile

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Key 2: Continuously refine underwriting18-Mos Delinquency Rate (30+ DPD) of June 2015 36-Mos Personal Loans

(n=36648, data as of 1/17)

Source: CK analysis of member tradeline data + platform originations, as of January 2017.

■ Online Lender■ Bank ■ CK Originated ■ Credit Union

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with additional, alternative data sources

Source: Internal CK model, as of January 2017. Model built on customers in score range 550-559, who returned after 12 months

CK Behavioral Model Performance

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Key 3: Solve real consumer pain points with certainty

43% approval rate

Source: Internal CK analysis of personal loan originations, as of January 2017.

2016 Personal Loan Application to Approval Rate

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transparency

Source: Internal CK analysis of member tradeline data, as of January 2017.

2016 36-Mos Personal Loan Originations, Random Sample (n=10,000)

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and simplicity

Number of questions asked in loan application

Source: Internal CK analysis, as of January 2017.

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Thank You