eNewsletter Summer 2017
It is a fact that marketplace lending is growing exponentially. Supported by a technological boost in combination with the simplicity of business offering, marketplace lending platforms are disrupting the business of lending. This is evident in a number of studies and publications, as the next multi-million dollar asset class.
Actually, the rise of alternative finance presents several opportunities to banks catering to potential borrowers who can’t get a regular bank loan because of their credit scoring; proposing to become a marketplace lender to customers interested in a high-risk/high-return investment mechanism; using existing alternative finance networks as marketplaces to push products and services; and most of all, attracting tech-savvy millennial consumers. Moreover, beyond this, there is also the possibility that the borrowing of the future might not only be of the planned, mid-to-long term variety, but also create a demand for “here and now” loans that marketplace lending is ideally suited to fulfill.
Regulation will play a crucial role for FinTech companies. It is therefore important to find the right balance that allows players to innovate while ensuring there exists a well-defined regulatory environment. Banks, which have dealt with regulatory compliance for decades, obviously have the advantage here. Now they need to realign their business models or even better, to extend their business offering to stay competitive against the new lending platforms.
Profile Software is an innovator in this area offering a Marketplace Lending solution that has successfully been utilised by start-up FinTech firms and established banks entering this sector.