Digital Lenders are taking over. The year 2017 has been the year for bitcoin, but it has also been the time for digital lenders, who seem to be experiencing significant growth across personal, SME, and student-focused verticals. Despite the abysmal stock fall of LendingClub, arguably the pioneer in the online lending space, digital lenders in 2017 has seen steady growth in the space and will continue to do so in the coming years.
A new report by S&P Global Market Intelligence projects that digital lenders across the personal, small and medium enterprise, and student-focused segments will originate $62.84 billion in new loans in 2021. This represents a compound annual growth rate of 16.5% during the five-year period ending December 31, 2021. These estimates encompass originations from 15 of the most prominent lenders in the space.
Digital lending in the U.S. traces its roots back to the launch of Prosper Marketplace Inc. and LendingClub Corp., which allowed individuals to lend money to others on a peer-to-peer basis. Since then, banks and other institutional investors have become the primary source of capital for these lenders.