Marketplace lending 2.0
Bringing on next stage in lending
Marketplace lending is on the cusp of transformation—again. Banks, marketplace lenders (MPLs), fintech firms, and other organizations are converging into a digitized and efficient ecosystem. For MPLs that want to develop and evolve, tactical partnerships and lending as a service may be key. Read this report to examine the future of lending and consider how to make the most of new opportunities.
- The story is more than marketplace lending and banks
- Examine the future, by asset class
- Get in touch
- Join the conversation
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The story is more than marketplace lending and banks
The first report that the Deloitte Center for Financial Services released on marketplace lending in March of last year probed whether the convergence of banks and MPLs is inevitable. We learned that not only were they already converging, but more convergence was to come.
Today, we see a picture that is much bigger in scope than just MPL-bank convergence. Marketplace lending is an integral piece of a larger
Download the PDF to learn how marketplace lending will continue to evolve.
Examine the future, by asset class
In terms of sheer volume, unsecured consumer lending (which increasingly includes student loans) still often rules the marketplace lending landscape by a wide margin, with small business an up-and-coming second, yet other asset classes are also beginning to benefit in meaningful ways.
On the small business front, the Federal Reserve estimates that there is still unsatisfied demand in the hundreds of billions of dollars, and that marketplace lending has begun to make a dent by bringing renewed attention to the market that includes increased bank involvement in the sector either through their own efforts or through MPL relationships.
Currently, only four of the top ten mortgage lenders are banks, credit unions, or other depository institutions, compared to six in 2015 and eight in 2011. In fact, the three banks that accounted for half of all mortgage originations in 2011 now only account for 21 percent. The residential mortgage process still often requires reams of antiquated legal documentation and procedures in most states, so
Commercial real estate
On the commercial real estate (CRE) side, nonbanks have been investing in the CRE market for a while. Private equity, hedge funds, Real Estate Investment Trusts (REITs), and institutional lenders have created and developed, a deep nonbank market, so it is only natural that marketplace lending proliferates to make processes even easier for institutional investors.
Although auto lending is an asset class that may see a rocky patch in the near future, MPLs are nonetheless focusing on the aspects of it that are easily disintermediated. Namely, auto financing is still typically unnecessarily paper-based. Where retail mortgages have multiple parties (for example, bank, attorneys, inspectors, and appraisers) that make documentation complex, auto financing does not. Although often financed through a single dealer, the process is quite inefficient.