Brush Up Your Knowledge of Marketplace Lending With Bryan R. Ziegenfuse and Learn Why it May Come in Handy for You
Marketplace lending is when financial institutions other than banks match borrowers up with lenders. Marketplace lenders use technology to evaluate and process these loan requests, which saves time and streamlines the loan approval process, according to Bryan Ziegenfuse.
While banks lend deposits from their clients, marketplace lending platforms do not lend their own capital and they do not take deposits. Rather, they match up lenders and borrowers, then take a fee for their service of operating the platform. Marketplace lenders serve as an intermediary between lenders and borrowers, Bryan R. Ziegenfuseexplained.
Instead of working with a bank, marketplace lenders provide an alternate financial institution. “Banks are not able to serve all customers, whether that is customers who are having trouble obtaining a mortgage or money for a business,” Bryan Ziegenfuse said. “Marketplace lenders can provide better interest rates in some cases and fill in the gaps that banks are unable to.”
Marketplace lending has grown astronomically, though it is still relatively young. It is expected to hit $122 billion in loan origination volume by 2020. These numbers do not mean that marketplace lenders rival banks, but marketplace lending is increasing in popularity. In fact, marketplace lending is predicted to be a trillion-dollar industry in 10 years.
A key component of marketplace lending, Bryan Ziegenfuse said, is the use of technology to speed up the lending process. Marketplace lenders operate completely online, and the process is expedited additionally because there is less paperwork than with traditional banks. Getting started with taking out a loan takes only a few minutes for borrowers and the funding takes a few days at most. Therefore, marketplace lending has an appeal because the process is quick and typically quite painless.
According to Bryan R. Ziegenfuse, marketplace lending is an efficient process because borrowers and financial institutions are able to be matched according to whether they get value from each other. Borrows can then access products with fair prices and investors receive a competitive return financially, so everyone can benefit from this type of transaction.
“I look forward to seeing how marketplace lending will continue to develop and evolve as it becomes more popular and more people learn about how it can benefit them,” said Bryan Ziegenfuse.
Bryan R. Ziegenfuse is a managing partner of I Fund Philly and has had a diversified 15-year career as an executive across the lending, capital markets, finance and portfolio management disciplines.