Last week, I had the pleasure of attending LendIt, the largest annual conference about online lending, and participating as the moderator of a panel about the student loan market. During the conference, I saw a lot of great presentations about the industry. The following are just a few of my favorite slides and stories.
Why the online lending market has emerged
Former Secretary of the Treasury Lawrence Summers included this slide that shows the growing spread between short term unsecured loans and treasury yields. This has likely made it possible for online lenders including Lending Club, Prosper and other similar lenders to enter the market with very competitive rates and increase their customer base.
How online lenders compete in the market
Former Administrator of the U.S. Small Business Administration Karen Gordon Mills showed the relative strengths and weaknesses of banks vs. online lenders. As the chart exemplifies, banks have significant advantages with respect to low cost of capital and large pools of existing customers, but online lenders have been able to grow as the result of innovations in customer experience, underwriting models and less regulation.
How far the market has progressed
Ron Suber, President of Prosper, demonstrated how quickly the growth rate of online lending has been in the last two years, outpacing both the S&P and smartphones. As conference founder Peter Renton pointed out, this growth has resulted in U.S. online consumer and small business lenders doing an estimated combined $14 Billion in loan volume in 2014 with projected growth to $32 Billion in 2015.
What’s to come in the near future
Lending Club CEO Renaud Laplanche showed that despite its growth over the last several years, marketplace lending is still just a drop in the overall U.S. Consumer and Small Business Lending Market bucket.
The excitement about the evolution of online lending as well as the profound growth and innovation in the space at LendIt was palpable. This trend is broadening consumers’ options and better addressing their needs, which will fuel continued growth in the space.
To learn more about the student lending industry and how to save thousands by refinancing your student loans, visit Credible.