Fintech Lenders Gain Traction

By Ron Jooss01.10.2018

Financial technology (fintech) lenders continue to gain market share for personal loans, according to a study from TransUnion.

TransUnion studied unsecured personal loan originations over the past several years, as well as more detailed portfolio performance between 2014 and 2016. The analysis compared loans issued by banks, credit unions, fintechs, and traditional finance companies.

The results? The share of personal loans fintechs originated has risen dramatically in recent years, from about 4% in 2012 to 30% at year-end 2016.

The trend continued through the first six months of 2017, with fintechs representing 32% of personal loan balances.

“The personal loan market has rebounded nicely from the recession, with material consumer demand for personal loans across the credit spectrum,” says Jason Laky, senior vice president and consumer lending line of business leader at TransUnion. “Many lenders exited the market during the recession. Our study clearly shows that when demand for personal loans recovered, fintechs seized the opportunity.”

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These nontraditional lenders focus originations in the near prime and prime risk tiers. During the fourth quarter of 2016, 59% of fintech loans originated fell into those two risk tiers.

Counter to generation assumptions about fintechs, about 10% of originated fintech personal loan balances are subprime, compared with 14% for the overall market, TransUnion reports.

(via Credit Union Magazine)