Marketplace Lenders Facing Four Headwinds

By Nick Clements

“The easy money is no longer here.” Peter Renton of Lendit USA, a marketplace lending conference, kicked off the annual celebration of the industry with mixed messages of rapid historic growth and looming challenges for the burgeoning industry.
2015 was a year of historic growth for marketplace lending. Venture capital firms poured $2.5 billion into marketplace lenders, according to Avant CEO Al Goldstein. Lending to consumers continued to grow exponentially, with more than $20 billion originated in 2015. Marketplace lenders have brought the personal loan market back to life, and now represent 24% of all unsecured personal loans made in America. These lenders invest heavily in technology to provide a better consumer experience and lower interest rates. Their success can be seen in higher net promoter scores for consumer lenders compared to traditional banking. Whereas 78% or Lending Club customers would recommend the company to a friend, only 9% of traditional credit card customers would do the same.
Despite the rapid growth, there is a sober tone at this year’s conference. Renaud Laplanche, founder and CEO of Lending Club, outlined four headwinds facing the industry during his keynote address: venture capital funding, interest rates, the economic cycle and the regulatory landscape.
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