This article mentions a very interesting point regarding the predicted futures of marketplace lenders such as Lending Club, OnDeck. It states “if the funding pressure continues, large banks could end up acquiring the marketplace lenders, or pieces of them.” I share the same opinion and also believe such synergy is the appropriate way this industry should operate. I personally never believe in the success of those marketplace lenders. Even though, they help more people gain access to needed financing more quickly and cheaply compared to traditional banks, they are more prone to adverse selection problem due to less time of doing sufficient due diligence about their borrowers. Consequently, it will lead to increasing defaults and more seriously, bankruptcy of those lenders. The synergy will help combine banks’ extensive expertise of screening and managing loans, and marketplace lenders’ disruptive technology. As a result, it will not only benefit both banks and marketplace lenders but also secure the lending industry.
Source: https://www.nytimes.com/2016/05/10/business/dealbook/as-lending-club-stumbles-its-entire-industry-faces-skepticism.html