The new data comes from the first ever Fintech Marketplace Trends Report provided by the company. According to information in the report from Cision PR Newswire, fintechs have more than doubled their market share in the last four years, up to 49.4% from 22.4% in 2015. Further, the Experian data shows, overall, unsecured personal loans grew substantially in that same period, as new loan originations totaled 1.3 million in March, compared to March of 2015 when there were 656,000 originations.
To that end, unsecured personal lending hit an all-time high in 2018, as per a CNBC report of TransUnion data. The article notes that lending surged 17% to $138 billion, with the growth largely driven by fintechs. Consumer loans fell, primarily, into three categories; debt consolidation, retail and home improvement financing.
The Experian reportThe Experian report addresses changes in fintechs’ market share of unsecured loans with the aim of helping lenders make better decisions. "We use analysis like our Fintech Marketplace Trends Report to provide insights that help lenders make more informed decisions," said Michele Raneri, vice president of analytics and business development at Experian. "We know unsecured personal loans represent the largest product offering in the fintech industry and our report reveals continued growth in this area over the last four years. We believe significant changes in the financial profile of fintech borrowers and an increase in adoption from younger consumers is fueling this growth."
From Twitter:
Vipul Shah @VshahMS
How is #fintech disrupting consumer lending? Our Alternative Lending Group Portfolio Manager Ken Michlitsch shares his views. https://morganstanley.com/im/en-us/financial-advisor/insights/investment-insights/fintech-continues-to-disrupt-consumer-lending.html?cid=ntmt-corp-fintech-2800
Fintech personal loans average $5,548, which is less than the traditional loan average of $7,383, according to Cision PR Newswire. “While the average fintech loan has steadily decreased over time, consumers are increasingly turning to fintech lenders for unsecured personal loans.” The report notes some discrepancies in the types of borrowers who have turned to fintechs. Experian finds that more “near prime consumers” are utilizing fintechs, while traditional banks have more “super-prime” borrowers as well as “subprime” and “deep sub-prime” borrowers. Prime borrowers account for 35.9% of loans for traditional institutions and 35.3% for fintechs.
Loan Scores
Super-prime: 781–850
Prime: 661–780
Near prime: 601–660
Sub-prime: 500–600
Deep sub-prime: 300–499.
"We share a common goal with our fintech and traditional lending clients–to help more consumers gain access to the financial services they need," said Greg Wright, chief product officer of Experian Consumer Information Services. "We're seeing fintechs create digitally streamlined, customer-focused experiences, which may be the key contributor to their substantial growth in the personal lending space. Fintechs may be gaining traction as they are eliminating potential barriers consumers may face and are creating a more convenient experience."
According to the Experian report, California claims top billing for having the most unsecured personal loans generated through fintechs, with Texas, Florida and New York coming in behind it.
