Online Lending is Becoming Mainstream

Things are looking very positive for (payday) lending in 2013.  I’m going to make the prediction that the name “Payday” is going away.  High interest / high risk loans are not going anywhere.  I think the concept of paying a loan in 2 weeks is going by the wayside.   It makes the situation uncomfortable for the lender and the borrower.

With that out of the way, what’s different about 2013?

  • Think Finance proved that you can get big fast.  Gross revenue of ~$502 million in 2012.  This is remarkable because 2011 was ~$249 million.  Yep, that’s 100% growth.  
  • High tech companies are getting into the mix, like LendUp and BillFloat trying to disrupt the industry.  Don’t forget Zest Cash, founded by a  former Google exec.  These companies are raising millions in capital from investors.  

Now the big pink elephant in the room.  Think Finance partners with banks and Indian tribes that allow them to avoid state scrutiny.  I say, good for them.  I’ve seen the terrible bills that have become laws in many states.  Most of them piss off borrowers and treat them like children.  Think Finance is able to offer financial products that provide borrowers that need cash with terms that are manageable.  Everything I’ve heard is that they treat their customers right.  That’s how real competition works.

What state legislators don’t realize (or don’t care) is that they are killing competition and it’s harming the consumer.  Many of these states are more interested in creating more state jobs and licensing revenue than helping the consumers in their state.  It will be interesting to see what happens on the federal level.  I know of at least 502 million reasons that it’s going to be interesting.

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