Orchard, an important participant in the online lending world, benefits from a unique perspective. The company powers the digital pipes that channel billions of dollars of institutional money into marketplace lending platforms. As a valued partner in the P2P / Marketplace lending space, Orchard took the opportunity to provide feedback to the US Department of Treasury request for information (RFI)on internet lending. As one would expect, Orchard believes strongly in the power and potential of online lending. This potential is characterized by transparency and efficiency – something that benefits consumer and investor alike. The transparency portion is in contrast to traditional finance – an area that largely remains in the shadows.
Crowdfund Insider has republished Orchard’s comments to Treasury below, but we also reached out to Matt Burton, CEO and co-founder of the Fintech company for additional thoughts on marketplace lending and the RFI process.
Burton highlighted the unrivaled transparency of Marketplace Lending – in stark contrast to the traditional banking past;
“One of the things behind the success of marketplace lending is the availability and use of data. Maybe it’s because so many of the players have come from tech backgrounds; but the mindset is very different than in the world of traditional banking. Banks seem to view information as something proprietary that needs to be protected rather than something that benefits the entire system when shared appropriately.”
The previous decade was marked by a struggling financial industry. Burton believes there is opportunity for a new capital access paradigm;
“Coming out of 2008 we saw a real constriction of credit – even for great borrowers. That was a shame – but it was also an opportunity. Peer-to-peer lenders – and the entire marketplace lending industry – rose up to meet the demand for credit. The move to new, data-driven lending models is really just beginning and over the coming years and decades there will be a global shift in the way capital is distributed, risk is understood and finance works. It’s an incredibly exciting time.”
While Treasury is not a rule making entity and their interest in P2P/ Marketplace lending is justified, the federal scrutiny is welcomed but unnecessary regulations – not so much. Burton supports thoughtful rules but notes it is a balancing act;
“We’ve seen the what happens when the world of finance is under regulated and I think everyone recognizes that any industry controlling the flow of trillions of dollars needs scrutiny. At the same time, however, for any industry to innovate and evolve there needs to be freedom to experiment and try new ideas. What we’re seeing with marketplace lending is an industry – and regulators – trying to find and strike the right balance. It’s not an easy task but it’s a critical one; and one that we need to get right.”
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