There is a demographic trend happening today that no one is really talking about. It is a trend that will ensure a major tailwind for online lending platforms and a potential headwind for traditional banks. The millennial generation (those born between 1982 and 2004) is the largest generation in history and we don’t like doing business the way our parents’ generation did. We like speed and efficiency when it comes to using products and services.
Above all else, millennials are open to a new way of doing things. We will be among the fastest group to adopt nontraditional banking services. This includes services like mobile wallets, alternative payments services and yes, peer to peer lending. It is no wonder that niche peer to peer lenders like SoFi, LendLayer and Upstart are focusing on my generation.
Upstart goes beyond simple data points like FICO score and years of credit. They take into consideration schools, academic performance and standardized test scores. For millennials with a thinner credit file, accessing credit is only available with this type of underwriting.
Looking to learn software development? LendLayer focuses solely on financing students who are looking to just that. They offer loans starting at 6.49% with no payments for 6 months. LendLayer, like Upstart, is looking at hire-ability rather than solely just someones financial situation.
In the case of SoFi, who are primarily involved in student debt refinancing, it is an immense opportunity if executed properly. Student loan debt is over $1 trillion and two-thirds of American students are graduating with some level of debt. Not surprisingly, SoFi was the fastest marketplace lender to reach $1 billion in originations (30 months).