Institutional investors are turning their favorable attitudes about the marketplace lending industry into action, increasing their investment in the sector over the past year according to a new report by Richards Kibbe & Orbe LLP and Wharton FinTech. Our 2016 Survey of U.S. Marketplace Lending finds that half of all institutional investors surveyed have made some form of investment in marketplace lending, up from less than 30% just one year ago.
The second annual survey illustrates solidifying confidence among investment funds in the disruptive industry of marketplace lending, which challenges the traditional bank lending model by connecting borrowers and lenders directly over Internet-based platforms. The survey of more than 300 institutional investors also reveals that optimism about marketplace lending continues to grow, running counter to the widespread predictions by other observers of an industry contraction. More than 80% of respondents expressed high or moderate levels of optimism for marketplace lending’s future, up from 71% last year.
Other key findings include:
“Last year, it was clear that institutional investors saw the promise of marketplace lending. This year, they stepped off the sidelines and into the action,” RK&O partner Jahan Sharifi said. “Institutional investors are right to identify potential regulatory developments as a key factor in the industry’s continued growth, which means they will want to arm themselves with better knowledge about the evolving regulatory framework,” added Scott Budlong, also a partner at the firm.
“Our second survey gives us a chance to compare data with last year’s baseline,” said Steve Weiner, co-founder of Wharton FinTech. “We predicted that the views and actions of institutional investors toward this nascent industry would change rapidly, and this year’s results bear that out.” Wharton FinTech President Uday Seth added, “The unchecked optimism toward this industry, combined with the fact that it is still maturing, makes it an interesting one to watch, particularly for institutional investors that sense opportunity.”
2016 LendIt USA in San Francisco
Mr. Sharifi and Mr. Budlong presented the findings from the survey at the 2016 LendIt USA conference on April 12 at the Marriott Marquis in San Francisco. They spoke on a panel called “The Platform Awakens: Five Themes for 2016.”