A Trillion Dollar Market By the People, For the People

Foundation Capital

Charles Moldow

Research

35 Pages

Foundation Capital examines how marketplace lending could reshape traditional banking by connecting borrowers and investors directly through technology platforms. The paper argues the industry could exceed $870B as consumers abandon banks, while online lenders gain traction through lower costs, faster approvals, and data driven underwriting.

Key Takeaways

Explosive Loan Growth: Marketplace lending volume climbed from $871M in 2012 to $2.4B in 2013, with projections approaching $9B for 2014 originations.
Cost Structure Advantage: Online lenders may generate more than 400 basis points of cost savings, including origination expenses reportedly 91% below Discover Card.
Investor Yield Appeal: Lending Club stated 92% of diversified investors earned between 6% and 18%, while no portfolio holding at least 800 notes lost money.
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