After online marketplace lending took 2014 by storm, American Banker devoted its "Innovation of the Year" article to breaking down this industry's rapid rise to prominence. The article breaks down online lending's pacesetters, facilitators, crossover plays and more to provide a comprehensive picture of how this area of fintech has grown and where it's heading.
A flood of new capital from hedge funds and other institutional investors entered the market. Bankers sat up and took notice. New asset classes — including small-business loans, real estate loans, and even loans for the purchase of solar panels — were pioneered. An ecosystem of ancillary firms matured. By December, roughly 100 different online platforms were operating in the U.S., according to one estimate. As a result of the industry's rapid growth and evolution, American Banker has named marketplace lending its Innovation of the Year. Here's one sign of dizzying change in this industry: American Banker's editorial staff recently had an internal debate over what moniker to use to describe it. Until recently, "peer-to-peer lending" was the preferred term for the business activity of companies like Lending Club and Prosper.