S&P Global just published their 2017 U.S. Digital Lending Landscape report.
They estimate that 15 of the most prominent U.S. digital lenders grew originations at a compound annual growth rate of 129.4% during the five-year period ended Dec. 31, 2016. Going forward, they project slower growth for the industry as lenders focus on building sustainable businesses
with higher quality borrowers.
They predicts that these lenders will originate $62.84 billion in new loans during 2021, up from $29.31 billion in 2016. This represents a CAGR of 16.5% for the five-year period ending Dec. 31, 2021.
Personal-focused lending is projected to grow at a CAGR of 12.4% to $24.31 billion by 2021. The small and medium enterprise and student-focused lending segments are projected to grow faster, with respective CAGRs of 21.5% and 18.4%.
Regulation remains unclear for the industry, but signs of progress have emerged during the past year. Regulators have started to take a closer look at digital lending in an attempt to create a fair and clear regulatory framework.
Venture activity picked back up during the first three quarters of
2017, with $832.5 million raised by the lenders in our analysis.
Student-focused lender Earnest was acquired by student loan
servicer Navient for $155 million in November.Interest rates and loan sizes have remained relatively unchanged over the past year as lenders focus more on adjusting the rates and loan sizes associated with specific credit grades.
As regulators take a harder look at digital lending, corporate
governance and management teams must ensure that their
companies are beyond reproach. 2017 was the second consecutive year in which a high-profile CEO has been forced to
leave their company.
