Fintech Outpaces Banks and Credit Unions in Personal Loans
According to a recent report by TransUnion, personal loan balances reached a record $138 billion in 2018. The growth in personal loans was led by fintech firms, which made more personal loans than banks, credit unions, and traditional finance companies.
In 2013, banks once captured 40 percent of the personal loan market, but they have gradually lost market share over time. Today, banks make up only 28 percent of the market. Credit Unions and traditional finance companies have seen similar declines in personal loans, now capturing only 21 percent and 13 percent of the market, respectively.
Fintech firms, however, have surged since 2013 when they only captured 5 percent of the market. Today, fintech firms capture 38 percent.
“The rapid growth in consumer loans sits squarely on the shoulders of fintechs,” said Jason Laky, a senior vice president at TransUnion. “Fintechs have helped make personal loans a credit product that is recognized as both a convenient and simple way to secure funding online.”
Fintech firms appear to be ready to capture an even larger market share of personal loan balances in 2019 as fintech firms received a record amount of funding in 2018, earning nearly $11 billion last year alone. This was a 38 percent increase from the year before.