DBRS Publishes Commentary on Marketplace Lending

DBRS, Inc. (DBRS) published a commentary titled “U.S. Unsecured Personal Loans — Marketplace Lenders Continue to Expand Market Share,” which provides an overview of the unsecured personal loan market size and composition, marketplace lending’s positioning, growth in the marketplace lending sector, the main types of marketplace lending business models and some of the challenges currently facing the young and evolving industry.

Summary highlights of the commentary include:
-- Loans sourced by marketplace lenders are 38% of all U.S. unsecured personal loan balances in 2018, the largest share relative to banks, credit unions and traditional finance companies, up from just 5% nearly five years ago.
-- The growth of marketplace lenders has been fueled by their innovative approach in using digital means for enhancing loan underwriting and consumer experience.
-- From a financial institutions ratings perspective, DBRS generally views marketplace lenders with a direct lender model more favorably than those with a partner bank lender model.
-- The majority of unsecured personal loan marketplace lenders originate through a partner bank, potentially raising "true lender" issues. This relationship has evolved to address legal and regulatory concerns.
-- The viability of marketplace lenders in the medium term will depend on their ability to achieve sustainable profitability.

Notes:
A full copy of this commentary is available by contacting us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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