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The Disruptive Potential of Marketplace Lending in the U.S. Consumer Credit Market

  • ID: 3330373
  • Report
  • July 2015
  • Region: United States
  • 27 Pages
  • Mercator Advisory Group


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10 years ago, the concept of marketplace lending was a quirky idea that intrigued a few venture capitalists. Today, marketplace lenders are some of the fastest growing, most innovative firms in the U.S. financial industry. Through the sophisticated application of technology, these new lenders are driving tremendous operational efficiencies and profitably fulfilling consumer lending needs that have historically been underserved by traditional banks. With an overwhelming amount of investment money and publicity flowing into the marketplace lending industry and regulatory slowly coming into focus, it is clear that this new class of financial service providers is set to fundamentally disrupt the status quo.

The most recent research report, The Disruptive Potential of Marketplace Lending in the U.S. Consumer Credit Market explores what exactly that disruption will look like, both in terms of the impact to the $3.4 trillion U.S. consumer credit market as well as the broader strategic implications for established banks and credit card issuers.

“The success of marketplace lenders has captured attention,” comments Alex Johnson, author of the report. “Marketplace lenders are to lending technology what Google is to self-driving cars, a wake-up call for incumbents in their industry.”

Highlights of this Research Report include:

- Introduction to the marketplace lending model utilized by leading by the largest platforms in the U.S
- Profiles of the two most successful marketplace lending platforms in the U.S., Lending Club and Prosper
- Comparisons of the U.S. and European marketplace lending industries, with a focus on how U.S. firms could learn from their European counterparts
- Analysis of the current state of the marketplace lending and its place in the broader alternative lending fintech space
- Overviews of the current regulatory environment for marketplace lenders and likely future regulatory frameworks
- Projected development paths for the evolution of marketplace lending platforms and an overview of the strategic implications of those development paths for industry incumbents
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1. Executive Summary

2. Market Size

3. Definitions

4. Marketplace Lending Model
- Role of the Peer-to-Peer Lending Platform

5. The State of U.S. Marketplace Lending

6. Profiles of Two Leading Marketplace Lenders
- Lending Club
- Prosper

7. Advantages of an Alternative Approach

8. The Future of Marketplace Lending: Variables
- A Young Business Model
- Underserved Markets
- Focus on Growth over Profitability
- Regulation

9. How Will Marketplace Lending Disrupt the U.S. Consumer Credit Market?
- Fringe Competitors
- Consolidated Exchanges
- Technology Enablers

10. Conclusions

Figures and Tables

Table 1: Risk Grades and Average Interest Rates: Lending Club and Prosper, March 2015
Table 2: The Global Alternative Lending Landscape: A Representative Sample of Platforms by Category

Figure 1: Marketplace Lending Model for Consumer Lending
Figure 2: Purpose of Loans: Lending Club and Prosper (by Percentage), 2010 and 2014
Figure 3: Top Venture-Backed Alternative Lenders (Globally), 2010 to Q1 2015
Figure 4: Lending Club Loan Issuance, 2011–2015
Figure 5: Prosper Loan Issuance, 2011–2014
Figure 6: A Low-Cost Business Model: Operating Expenses/Total Balance Outstanding, Basis Points
Figure 7: Using Heuristics in the Risk Evaluation Process
Figure 8: Marketplace Lending: A Young Industry
Figure 9: U.S. Regulatory Landscape for Peer-to-Peer Lending
Figure 10: U.S. Consumer Credit Debt, 2007–2014
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