Marketplace Lending Finds a Place in Institutional Portfolios

For centuries, corporate and consumer lending has followed a traditional model in which financial institutions act as centralized counterparties, making loans funded by deposits. Around 2006, this model was turned on its head by a new breed of fintech companies leveraging the network effect of the internet to directly connect lenders with borrowers. Today the marketplace lending model is evolving into a new phase, as institutional investors are increasingly allocating capital to marketplace loans in search of higher yield and diversification.