Moving Towards Mainstream Acceptance

Aaron Vermut[Editor’s Note: This is a guest post by Aaron Vermut, the CEO of Prosper. Under his watch Prosper has grown from $9 million a month in loan volume to more than $250 million per month in just over two years. He was a recent guest on the Lend Academy Podcast and his interview is the most downloaded episode to date.]

As far as industries go, the marketplace lending industry is young. The notion of getting credit from anyone but a traditional institution was unheard of when Prosper launched in 2006. Prosper was the first to bring the marketplace concept to the financial services industry, and to many people it was a novelty and nothing more. Even just two years ago when I joined Prosper, many people were still unconvinced of the potential.

As we all prepare for the 3rd Annual LendIt Conference, it is clear that things have changed – we have built thriving marketplaces with a healthy ecosystem. The potential is no longer in doubt. The growth of so many platforms in this industry has proven that there is no winner takes all in financial services. This week, Prosper Marketplace announced a $165 million round of financing, valuing Prosper Marketplace at $1.865 billion. This is a big validation of what we have been doing for the last two years, and will help us further scale as we work on being an established, recognized and trusted brand.

Last week, we also announced that we had crossed $3 billion in loans through our platform and closed out a record quarter at nearly $600 million in loan origination, up 300% from a year ago. We are also on track to do another record year. Our focus in 2015 is on continued, quality growth. We are hiring an average of 10 people a week in California, Arizona and Utah to help us scale, and are investing heavily in our products to create the best experience possible for our borrowers and investors. So while we’re extremely proud of how far we’ve come in two years, there still much to do to take full advantage of the opportunity in front of us as we move towards mainstream acceptance.

Why is marketplace lending thriving? It’s fairly simple, really. People are realizing that credit cards might be a good way to buy things at point of sale, but they are not a smart way to get credit or borrow money. For borrowers, marketplace lending offers a better way to take out a loan with affordable interest rates and better terms. What started as a great way to consolidate debt is quickly become the smarter and easier way to borrow money for everything from home improvement to elective medical procedures to special occasions. On the investor side, people with cash to invest are seeking out higher-yield alternatives to traditional markets, particularly during this time of historically low rates.

Financial services continues to be disrupted, and it’s not just lending — it’s in every aspect of the industry, including payments, money transfer, wealth management, banking, financial planning and capital markets. Efficient, unique and low cost platforms with large addressable markets like Amazon, Walmart and Vanguard are changing their industries — marketplace lending is just one piece of this larger secular change in the financial services industry.

I look forward to meeting up at LendIt with partners, investors, borrowers and others in this ecosystem who are changing how people perceive what a financial service company be.

  • Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.

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