Fintech lending's funding moment: how Upstart, LendingClub, SoFi and Affirm are rewriting the capital stack
What's the deal? March quarter earnings from major fintech lenders — Upstart, LendingClub, SoFi, and Affirm — reveal a sector-wide shift in priorities. Management teams are spending less time talking about customer acquisition and more time discussing deposits, warehouse facilities, securitisations, and committed capital relationships. The conversation on fintech earnings calls now sounds a lot like traditional banking.
Loan demand remains robust. Upstart reported $3.4B in first-quarter originations, up 61% year over year, with revenue rising 44% to $308M. LendingClub posted $2.7B in originations, up 31%. Affirm disclosed roughly 200 funding partners, more than $7B raised through note offerings over two years, and approximately $13B of forward-flow capacity backed by insurance companies, pension funds, and asset managers.
Why now? Fintech lending's first wave was about proving that technology could improve underwriting and distribution. That argument has largely been won. The next phase is about building funding models that hold up through credit cycles — and recent market volatility has made that urgency clear.
Companies are pursuing different paths to the same goal. Upstart chief executive Dave Girouard told investors the company remains "primarily" reliant on third-party capital but is pursuing a national bank charter to broaden its options. LendingClub, already operating as a digital marketplace bank, can draw on both deposits and institutional investors. Chief executive Scott Sanborn described that dual-channel model as a strategic advantage.
What could go wrong? Investor demand looks strong now — Affirm's asset-backed securities offerings have been 3.4 times oversubscribed since 2022. But that appetite could cool if credit performance deteriorates or rates stay elevated. Fintechs without diversified, committed funding sources would be most exposed.
Bank charters bring regulatory scrutiny and capital requirements that marketplace lenders have historically avoided. Pursuing one, as Upstart is doing, trades one set of risks for another.
The signal: Both Upstart and LendingClub sit at the late growth stage, yet they are pursuing divergent paths to funding durability — Upstart chasing a bank charter to complement its marketplace model, LendingClub leveraging the deposit base it already holds as a digital marketplace bank. That strategic fork illustrates a broader inflection point: the fintech lenders best positioned to weather the next credit cycle may not be the ones with the cleverest algorithms, but the ones that have locked in the most resilient capital supply chains before investor appetite turns.
Read more: pymnts.com
