From www.blog.lendit.co -
Recently I heard a “soft rock” version of Nirvana’s Smells Like Teen Spirit. As shocking as that was, it got me thinking a bit about how over time “alternative” things go mainstream. In the banking context, peer-to-peer or non-bank lenders are still “alternative” and they still represent a very small part of the >$3T overall US consumer lending pie (Federal Reserve, 2014), but it is growing by the day.
Lending Club issued $1.4B in new loans in the final quarter of 2014, and Prosper hit a total of $2B loans originated through its platform in Oct 2014. Kabbage, recently hit a $3M per day in new originations to small businesses, just five months after announcing the $2M per day milestone. FICO consumer research found that Millennials could be a strong source of growth for these institutions going forward as well. Peer-to-peer lenders are attractive to...
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- The relationship between the banks and the P2P lending sites is still working itself out. Many Banks are jumping on board and lending through the platforms, others are still wary.
- It's interesting to note that even though Millennials are highly likely to get a loan through peer-to-peer lending platforms, they still don't view it as being as safe as dealing with traditional banks. It will be interesting to see the shift in perception over the coming years. We are sure that will improve over time.
- P2P lenders have access to data sources that traditional banks don't have, making it easier to react to changes in the lending market and understand customer behavior better in order to judge the risk level of loans.