Peer-to-peer, marketplace or online consumer lending, has come a long way since its birth a decade ago. The two largest lenders, for example, loaned a combined $2.4 billion to consumers last year, triple what they did the year before. One forecast even expects the market to reach $1 trillion by 2025.
Understandably, conventional banks and financial institutions have taken notice. Some have already launched their own marketplace platforms for a piece of the action, further legitimizing the opportunity.
To cash in, however, retail and institutional lenders will need to broaden their selection beyond fast credit, student loans, home improvement and small business advances. They'll need to better understand the choices and preferences of borrowers — including the types of loans and the factors driving defaults — with the help of data science and analytics.
To that end, we recently survey 11,000 U.S. consumers on marketplace lending. We explored their perceptions on peer-to-peer lending, the profiles and predictors of default and the desired improvements to platforms and processes that extend across the marketplace.