In the last decade alternative finance has emerged to threaten the traditional banking system and the lending industry. Contemporary players have created new dynamics of competition, regulation and technology.According to Morgan Stanley the global loan origination market, could be worth almost half a trillion dollars globally by 2020 and most industry professionals agree that this figure is just the tip of the iceberg. It says there are more than 1,300 alternative lenders competing for 1 per cent market share while there are 6, 500 banks competing for the remaining 99 per cent of the market.
Now traditional lenders are increasingly partnering with innovative new platforms for fear of being left out of the digital finance evolution. Strategic partnerships are now the fastest growing channels for the space, generating a strong source of referrals, and traditional banks are the most likely and most prominent examples. In its report Alternative lending – Commoditizing loan applications through technology while paving the way for big data investing, EY points out that consolidation within a fragmented industry is inevitable.