The future of alternative lending shows great promise not only in the US but around the world as well. As many international banks are still unprepared to offer loans online, a growing number of online lenders are now ready to offer private loans.
But exactly how did online lending grow to become the huge industry that it is now? It might interest you to take a look into the some of the biggest online lending platforms, like Smslån, to understand this. Learn more about Smslån, and you’ll see the impact of the industry to those who can’t turn to traditional banking.
Online lending, popularly known as alt lending or marketplace lending, has grown immensely in the past years. Having rooted in Europe in 2005 with the emergence of ZOPA who started the P2P (Peer to Peer) lending, it is geared towards providing an easy platform to get a loan. ZOPA has been followed closely by Prosper, which launched its first official P2P platform in 2006. The US soon followed suit in the next 3 years by servicing student loans, personal loans, and small business loans.
Traditional loans dealing with banks require the borrower to submit several requirements. Due to this, borrowers are losing confidence in getting a loan. Online lending, on the other hand, offers an easy and no-fuss alternative to bank loans. You now have access to fast cash with a minimal requirement.
Growth in the online lending market was tremendous between the years of 2005 to 2008. About this time, online lending platforms started to partner with traditional well-known banks. This move provided an avenue for online lending to follow local regulations and acquire basic governmental licenses. But soon after financial regulators took notice of this, the local SECs required the online lenders to register and provide pertinent financial reports to the commission. This move by the SEC slowed down online lending for the next two years.
In 2011, however, P2P loans took a 360-degree turn. A $5 million investment was made to the company LendingClub. The industry evolves from being called a peer-to-peer lending to marketplace lending and, eventually, online lending. The next few years show another steady growth with the strong and well-funded partnership with established banks like Wells Fargo in the US.
Although showing a slowdown in 2015, online lending is now back on track. Implementing new and innovative automation and digital tools, investors in online lending are now assured of industry risk control and financial transparency.
By enabling measurable, scalable, and real-time risk control technology, the investors and secondary markets are now more confident in placing more funds into this industry. With the continuing growth of small and medium-sized businesses, online lending presents itself as a suitable option for funding and investment. It also helps that the local banks offer limited and time-consuming options. The growing confidence in online lending has triggered several companies to go beyond geographical boundaries.
The future looks promising for online lending. Prominent banks are now proving to be major players in the field. They are now testing and challenging their geographical boundaries to take a chunk of this lucrative alternative financial platform. Employing the best technology experts in the industry, online lending sites are now more automated and much easier to navigate.