Alternative Lenders: Ready for Credit Boot Camp?

Seemingly every day there are more non-banks that are willing to provide loans to consumers and businesses. This explosion in alternative lending options is the result of several c…

Seemingly every day there are more non-banks that are willing to provide loans to consumers and businesses. This explosion in alternative lending options is the result of several converging trends, including:

  • The millennial generation, which is a huge segment now entering their prime bank years and open to nontraditional forms of banking
  • Digital technology and social media, which are both facilitating innovations in how we conduct financial transactions
  • Traditional banks, which are still dealing with the aftermath of the financial crisis and are risk-averse to serving the unbanked and underbanked segments
The supporting evidence for the rise of alternative lenders is ubiquitous. For example, according to a recent article by, peer-to-peer (P2P) lenders in the US generated $6.6 billion in loans in 2014, up 128%.

At FICO, we’ve seen the rise of the alternative lenders first-hand through our participation with associations such as the Lend Academy. Founded in 2010 by Peter Renton as a resource for P2P lenders and customers, the organization’s membership has skyrocketed. Their flagship annual conference, LendIt, has grown from 350 attendees in 2013 to 2,500 attendees this past April, plus it’s expanded to events in Europe and China.

We’re excited to help as many of these new businesses as possible with our solutions that span the entire credit risk lifecycle. However, the surge in competition means a much smaller margin for error for each alternative lender who wants to stick around for the long-term. It’s not just head-to-head competition that alternative lenders need to worry about; it’s also the complex and ever-changing regulatory landscape, the abundance of nontraditional credit data (not all of which is necessarily helpful), and the heightened customer expectations for service and ease-of-use.

One of the keys to driving sustainable growth amidst all of these variables is a firm grasp of the basics.

That’s why we put together a “Credit Boot Camp” series that we partnered with the Lend Academy to deliver at the most recent LendIt USA event in New York City, and that we updated and ran again last month in a four-part webinar series. The overwhelming response rate—over 2,500 attendees total for the series—tells us that alternative lenders are not just voluminous, but eager to succeed and thirsting for knowledge.

As a result, we’ve made these episodes available for free to download. Below a link for each:

As you can see from the titles, we want to equip all of our alternative lending customers with the latest trends and best practices necessary to minimize risk and grow their lending portfolios. We also guarantee you’ll learn something.

Peter himself confirmed this, as he served as a co-presenter for the series. "Many people, myself included, have no formal credit background,” he told me after the last webinar. “So this Credit Boot Camp webinar series provided me with a wealth of information to help me get up-to-speed. I know far more about credit now than I did before this series began, and based on the feedback I have received, many others feel the same way."

Whether you’re a P2P lender, a pure-play digital bank, a debt consolidator, a direct lender, or one of the numerous subcategories of other owners or investors within the alternative lending segment, this is an exciting time to be in business. And FICO is interested in providing you with the knowledge and the decision tools to be successful. Please keep checking in with us for more news and updates in the months to come!

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