The traditional lending industry has been hit the worst by new startups since there was a lot of scope for improvement within the industry. Alternative financing FinTech startups launched products that not only helped borrowers but also helped in lowering operating costs through the use of technology. This model fits borrowers who want quick access to cash and at good interest rates.
Things started changing in 2007 but grew at slow pace. When banks became stricter in lending after the financial crisis, alternative lending models started growing at a rapid pace. Small entrepreneurs, who were having a hard time in getting loans from banks, started drifting to online platforms for fast cash.
When the alternative lending industry started to gain popularity, many predicted that it had the potential to disrupt a part of the banking industry. But nobody knew that it would happen so soon and that too, in such a big way. Banks and FIs are feeling left behind and entering online lending services by way of partnerships with established and emerging lending platforms. The lending market is gathering increased interest from established financial institutions.
The emerging online alternative lenders extensively make use of predictive modeling, data aggregation and electronic payment technology along with the conventional indicators such as small-business owner’s personal credit history and key metrics about borrower’s business to assess the health and performance of the business.
LTP has recently come up with a three-page sector snapshot on the US online platform-based alternative lending market which analyzes the addressable market for business lending through online platforms in the US and different trends in this sector.
The US online platform business lending market is dominated by two major players: OnDeck and Kabbage.
OnDeck originated $458.9 million of loans in 2013, representing a year-over-year growth of 165%. In 2014, the company originated $1.2 billion in loans, representing a year-over-year growth of 152%, all while maintaining consistent credit quality. In the first six months of 2015, OnDeck’s loan volume growth stood at 76% (loan origination volume of $835 million).
Table of Content:
1. Business Lending through Online Platforms
2. OPB Lending Forecasts in the US, 2012-2025 (E) (USD in billions)
3. Addressable Market for Business Lending through Online Platforms in the US
4. Market Share of Business Lending Through Online Platforms in the US – Players in the US
5. Market Trends
6. Technology Trends
7. Consumer Trends
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