Prosper President Ron Suber delivered an extremely well received keynote address at the LendIt conference held in Manhattan this past week. Over 2400 attendees converged from around the globe to discuss the future of finance, one where banks are on the decline and peer to peer, or marketplace lending, is taking over. Sure the traditional banking industry is part of the equation today. Marketplace Lenders, including Prosper, are quickly forming strategic partnerships with large and small banks filling a void in lending that has been vacant of accessible capital for far too long.
Banks have long been a core constituent to both local and global markets. Matching deposits with borrowers facilitating the necessary variable for economic growth to occur. But years of misdirected regulations have created an industry that is incredibly inefficient and far too costly to endure. Technology is fixing that now.
Prosper is one of the leading direct lending platforms in the United States today. The online lender has gone from zero to billions in a few short years boosted by creative entrepreneurs like Suber that possess a vision of a better way. The advent of institutional money, seeking the outsized risk adjusted returns, has become the rocket fuel powering exponential growth.
Suber drew a parallel to the mobile phone industry, one that started as a newfangled oddity to inevitably become an ubiquitous and necessary tool. He states, we [marketplace lending] have gone from a novelty to a great idea. Soon you will not be able to live with out us. This is beyond doubt.
Yes Prosper Marketplace and its compatriots are reaching escape velocity. The amount of loan originations are only a trickle today, measured in billions. In coming years this number will turn into trillions. Industry participants will guarantee this future now – as they predict the next months and years.
And what of banks? Traditional banks exist in a symbiotic relationship for the moment. Marketplace lenders need the banks as channel partners for borrowers and investors in their loans. But as one executive rhetorically stated, “once a platform starts taking deposits, that’s when the gloves come off”.
See Ron Suber’s Keynote presentation embedded below.