Friend or Foe
The Rise of Peer to Peer Lending and What It Means For Banks
Armistead Boyd
SVP Product and Data Partnerships
June 29, 2016
Change
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What I Know
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Drivers Behind P2P Usage
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Bank Model Vs. P2P Model
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P2P Market Share
To reach $150 billion, peer-to-peer lending platforms would need to capture 10% of the $800 billion in
revolving consumer debt and 5% of the $1.4 trillion of non-revolving consumer debt held by financial
institutions.
PwC’s analysis based on Consumer Credit Data for November 2014 published by the Board of Governors of the Federal Reserve. System.
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Beginning of the Hype
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…And the Fall
Reality Check for Marketplace Lenders
-American Banker
OnDeck Losses Grow as Lender Sells Fewer Loans
-The Wall Street Journal
Why Institutional Investors Are Shunning Online Lenders
-American Banker
As Lending Club Stumbles, Its Entire Industry Faces
-The New York Times
Skepticism
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Why is this Happening?
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Cost of Funds – OnDeck Capital Vs. Banks
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What We’ve Learned
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Digital Engagement
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What Does The Future Look Like?
No Innovation
Innovation
Current interest rate environment
prevails and banks do not innovate:
Current interest rate environment
prevails and banks innovate:
6-10% market share
2% market share
Interest rate environment normalizes
and banks do not innovate:
Interest rate environment normalizes
and banks innovate:
3% market share
<1% market share
Deloitte 2016
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Friend or Foe
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Case Study
“Today the use of software tools has driven the total cost to originate loans
from $4,800 to $374 – a 92.21% reduction. Plus we believe we are getting
more consistent credit decisions.”
“Modern software tools are enabling community banks to stay relevant in the
small business banking space. New alternative lenders and crowdfunding
platforms are getting loads of publicity for their “disruptive” characteristics.
Let us not forget that community banks were the “original” crowdfunding
platforms. Armed with new software tools, banks can outmatch the
newcomers on speed, technology, experience and rate.”
–Hugh Connelly, President Univest Capital Inc
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Friend or Foe
The Rise of Peer to Peer Lending and What It Means For Banks
Thank you..
June 29, 2016
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