HispanicBusiness

In the brief history of the Internet, the worldwide network has yet to meet a large retail industry from which it couldn't extract value.

Think of how we used to buy music, books, movies, fashion and travel services. Today, those industries deliver a huge chunk of customer transactions and services on the Web, which is why electronic commerce in the U.S. totaled $343 billion last year, according to researcher eMarketer.

Next in line for this type of online disintermediation: the financial services industry, which manages assets worth more than $1 trillion. Just as online brokerage E-Trade helped pioneer Web-based stock trading more than a decade ago -- and made fat commissions a thing of the past for all but the laziest of investors -- a new generation of start-ups is using Internet technology to make it easier and cheaper for consumers to access capital.

The growth of one company in particular, Lending Club, offers a glimpse of how much easier it will be for consumers to get a loan in five to 10 years.

The upstart is using the power of a peer-to-peer business model to do for money what Napster once did for digital music and Skype has done for long-distance phone service. Lending Club is making the middlemen, who have long dictated terms and charged hefty fees for services, unnecessary, as those services can be delivered far more efficiently over the Web.

"What we do is connect the source of capital directly with the use of capital," says Lending Club founder and CEO Renaud Laplanche.

Founded in 2007, San Francisco-based Lending Club topped $1 billion in loans for the first time last year and will soon fund its 100,000th loan, thanks to its ability to put potential borrowers together with other consumers willing to lend them money.

The company funded $120 million in loans in February and is growing at about 7% a month, says Laplanche, who expects the company to disburse about $1.7 billion in loans this year.

One benefit of the market the company is targeting is that large financial institutions have a long history of overcharging and underserving their customers, he says.

"People aren't used to getting things for free from banks," says Laplanche, only half-joking.

The company's Internet platform, where both lenders and borrowers go looking for opportunities, "behaves a lot more like an online marketplace -- like an eBay -- than a bank," he says.

Lending Club has so far focused on providing personal loans to consumers with high credit scores -- prime borrowers, as the industry calls them -- at interest rates primarily in the high single-digits. That's far better than credit rates offered by most banks or credit card companies.

At the same time, the company is in talks with "large asset managers" (which Laplanche declined to name) about creating a product for borrowers with less-than-prime credit, which would be funded by those large institutions, not Lending Club's individual lenders.

The individual club members who fund loans through the site "rely on us to do the risk management for them," by screening out subprime borrowers, Laplanche says, adding that the company's default rates and collection practices are in line with industry norms.

The company, which charges lenders a transaction fee of 1% and borrowers an origination fee of between 1% and 4%, had revenue of $5.5 million in February.

Lending Club is not a typical start-up, in that it raised massive seed funding of $100 million, a far cry from the $1 million or so of seed money for most tech start-ups. About $60 million of that is still available to the company as cash, as Lending Club turned cash-flow-positive early this year, Laplanche says.

The company also has a board of directors stacked with prominent veterans of the financial services industry, including: John Mack, former CEO and chairman of Morgan Stanley; Mary Meeker, a former Morgan Stanley Internet analyst, now a partner with the top-tier Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers; and former U.S. Treasury secretary Larry Summers.

While Laplanche wouldn't comment on whether the company had plans for an IPO, don't be surprised to see it go public this year or next, given its financial trajectory and heavyweight-packed board.

John Shinal has covered tech and financial markets for 15 years at Bloomberg Businessweek, the San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others