[Editor’s note: This is a blog post from Timothy Li, co-founder and board member at LendFoundry. LendFoundry is a Silver Sponsor at LendIt USA 2017 which will take place on March 6-7, 2017 in New York City.]
2016 reminded us that every industry goes through a maturity curve before experiencing hyper growth, and the online lending industry is no exception. As Artificial Intelligence, Internet of Things, Machine Learning, InsurTech and Crypto Currency took center stage of FinTech discussions lately, let’s not forget that the total consumer credit outstanding in 2016 has approached $4 trillion US dollars. It is a whopping 8%+ CAGR growth from 2011 where the credit outstanding was just $2.7 trillion!
So, the trillion dollar question is what will fuel this growth further? Here’s a hint-
“If you’re a New York Times best seller, would you want to spend the time and energy to create a word processor to enable writing? The answer is obvious.
Our revelation, basis perusal of the global lending industry suggests that ‘Tech’ is a critical element catalyzing this growth worldwide.
Insights from Europe
It is exciting to see the industry proliferating beyond UK borders, the birthplace of marketplace lending. Though still small compared to the UK market, continental Europe is on its growth path. Marketplace lenders have emerged as significant alternatives to banks. They are looking up to technology to help them address their top three challenges-
- Mitigate online fraud risks
- Deliver delightful consumer experience and
- Adhere to regulatory compliances
Insights from China
In general, the number of non-bank online lenders has increased significantly in international markets. We recently had the opportunity to meet with a few wealth management companies in China. What we saw was astonishing! The technology and data analytics are far more sophisticated than previously imagined. Thanks to the LendIt China Tour, we’ve uncovered many cross border opportunities to learn from our counterparts.
Insights from India
We’ve seen even more explosive growth, not just in terms of non-bank lending activities, but the entire marketplace lending ecosystem is maturing. There are a variety of FinTech startups that are bringing a bouquet of disruptive solutions in the areas like Lead Generation, Credit Bureaus, Identity Verification and Payment Systems.
One such startup is our strategic client, CreditExchange. While the CreditExchange team focuses on building the banking relationships, they are leveraging LendFoundry’s Loan Origination System (LOS) and Loan Management System (LMS) for operations.
Insights from Australia
We also visited the Australian lending market in late 2016. The Australian government has created specific FinTech sandboxes to enable rapid development of various FinTech startups ranging from the likes of Robo Advisors to Crowdfunding. With active involvement from the Australian government, we believe that Australia will be an exciting place to watch for the next set of lending innovations to emerge.
The US Market Isn’t Different
- Focus on core business
Gone are the days where a FinTech lending company’s valuation was heavily tied to proprietary technology. Lending companies now focus more on the efficiency of core business which is really tied to customer acquisition costs, credit risk models, fraud detection and more importantly, portfolio performance.
- Accelerated time-to-market with technology
As the US marketplace lending ecosystem matures, FinTech lending companies no longer have to spend massive amounts of time and resources to create fundamental building blocks to enable their businesses. Lenders are now able to launch their businesses in a matter of months as opposed to years. By leveraging technology and the pre-configured integrations, lenders not only save on time-to-market, but also gain an edge over competition.
Technology is a Critical Growth Driver
Matured lending platforms like US-based LendFoundry allow lenders to focus on their core business while providing them with a robust technology platform. LendFoundry has helped many small businesses and consumer lenders to launch their portfolios quickly. Its state-of-the-art Loan Originations and Loan Management Systems are designed with flexibility in mind to meet lenders unique and specific requirements.
Visit LendFoundry at LendIt New York at booth #438 to understand how technology can enable the modern lenders to win in the $4 trillion US lending market. Come and see the Tech of the FinTech ecosystem, LIVE!
On behalf of everyone at LendFoundry, I wish all the attendees and exhibitors at LendIt 2017 – New York a successful conference!