Making Sense of the Lending Industry's Rapid Changes

by Joseph Walent 0

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As Alternative Lending and Marketplace Lending become increasingly mainstream, a certain level of recalibration will be required, especially as the securitization of debt becomes formalized. The author does well in explaining how the new asset class, being less familiar to many in the financial sector, which carries forward to media covering sector may be prone to excessive conservative assessments.

I believe the difference in the rankings is because rating agencies do not have an opportunity to calculate the risks of P2P lending, as this sector has not completed a full loan cycle with sufficiently large amounts. I think this is also largely because rating agencies were miles out in their calculations back in 2008 when they assigned high ratings to some securities, which became almost worthless afterwards, and now they are skeptical about anything new.

Mercator Advisory Group recognizes FinTech investment in Peer-to-Peer lending platforms during 1Q16 has not kept pace with the exuberant levels observed in 3Q15, but as the article points out, the situation is far from dire.

Overview by Joseph Walent, Senior Analyst, Emerging Technologies Advisory Service at Mercator Advisory Group

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