Peer-to-Peer Lending Platforms in the US Industry Market Research Report Now Available from IBISWorld

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Lending has proven to be lucrative, but regulations threaten industry profitability. For this reason, industry research firm IBISWorld has added a report on the Peer-to-Peer Lending Platforms industry to its growing industry report collection.

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A rising prime rate will lead to opportunities for nontraditional lenders, but looming regulations will hamper industry growth.

The Peer-to-Peer Lending Platforms industry has blasted onto the scene during the five years to 2013, despite some growing pains during 2008 and 2009. Pioneered in the United Kingdom after 2000, peer-to-peer lending companies facilitate loans from individual investors who pool their money via operators' online platforms to loan money to consumers and small businesses. The risk is diversified, as investors' money is split among many different loans. Still, companies in the industry have struggled to create formulas that accurately portray the level of risk loan applications represent, leading to higher-than-desired loan default rates initially. The major companies, however, have prospered, with the largest player in the Peer-to-Peer Lending Platforms industry, Lending Club, turning a profit for the first time in 2013. According to IBISWorld Industry Analyst Natalie Everett, “Revenue for this industry has risen at an average annual rate of 176.6% during the five years to 2013 to $162.0 million, including a one-year increase of 27.6% between 2012 and 2013.”

After the initial tumultuousness the industry faced, growth will stabilize during the five years to 2018. “The industry will benefit from rising corporate profit and aggregate household debt, both of which indicate rising demand for loans,” says Everett. Further, small businesses and consumers will be more willing to look outside commercial banks and other traditional loan sources as the prime rate increases; one of the advantages of peer-to-peer lending platforms is its ability to offer lower interest rates to borrowers because it cuts out many of the financial intermediaries typically involved.

Because of how new the industry is, lending platform operators have faced significant regulatory challenges, and operators should anticipate continued uncertainty through 2018. Peer-to-peer lending platforms do not fit squarely in one financial category. The industry's products have been deemed securities, and industry operators therefore follow regulations set by the US Securities and Exchange Commission. However, federal government officials may ultimately decide that the industry is bound by laws governed by the Consumer Financial Protection Bureau instead. Or, regulations in lending and credit could change. Successful operators have and will continue to be nimble in regard to these sometimes costly and time-consuming changes.

For more information, visit IBISWorld’s Peer-to-Peer Lending Platforms in the US industry report page.

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IBISWorld industry Report Key Topics

Companies in the Peer-to-Peer Lending Platforms industry provide peer-to-peer lending, which occurs directly between individuals without the intermediation of a traditional financial institution. Peer-to-peer lending is a type of crowdfunding, which is the collective effort of individuals to pool their money to support the efforts of others. Crowdfunded fundraising, in which collective money supports others with financial donations and without planned repayment or accrued interest, is not part of this industry.

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About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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