The Alternative Lending market has seen considerable growth the last 15 years with the growth of digital servicing and the fintech sector. With a low cost of entry the market has been very active and many providers were offered as an alternative to traditional banks.
Amidst this growth the regulator stepped in, capping fees in 2015, which together with a review of lending and collections practices has forced additional compliance requirements, increasing cost and reducing revenue in the sector. This resulted in a shake up in the alternative lending market with many firms leaving the industry.
Compliance and cost to serve are two of the main focus areas within alternative lenders to maintain growth and profitability.