Alternative Finances

How Should P2P, Marketplace Lending Be Defined?

The online, peer-to-peer and marketplace lending scene is a growing one, particularly as more consumers and small businesses look toward alternative financing options that don’t rely on dealing with a bank.

But as the industry grows, how should it define itself? How should it be regulated? And how should lenders deal with margin pressures as the competition to offer alternative financing grows? This will likely be the topic of conversation at the LendIt USA conference that’s set to be held in New York City from April 13-15. As the Financial Times highlights in a recent article, the event brings together executives from Lending Club, OnDeck Capital and Prosper, along with newer players to the space like Elevate, Orchard and Kabbage.

The online lending industry has turned into about a $25 billion market, and has brought in large investments from traditional and non-traditional financial backers. Just last week, CAN Capital announced it secured a $650 million in funding from a dozen top bank lenders to grow its SMB finance program. But as the industry grows, Financial Times points out that it has left analysts discussing how it should be defined. Many refer to themselves as peer-to-peer or marketplace lenders, but some analysts are talking about “a moment of reckoning” for the industry players as it evolves.

As the alternative lending scene grows, this means having more conversations about how lenders can deal with margin pressures as more competition joins the space. It means talking about how regulators may change the P2P marketplace scene, particularly when it comes to managing lender fraud. These conversations will likely all come to light at the LendIt USA conference next week.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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