San Francisco, CA, May 19, 2016: Alternative lending has sprung up during a highly favorable credit environment, carving out a market based on smarter credit decisioning, speedier access to funds, a sleek user experience, and contextual marketing. Players like OnDeck, Kabbage, and hundreds of others have revealed significant gaps in how banks serve small business customers. Today, JAVELIN released, Build, Buy or Partner’ and Beyond: How Alternative Lending is Reshaping Small Business Banking, which examines how alternative lenders are poised to disrupt and how banks can build, buy or partner with them.
Despite banks still owning the largest share of the lending market, awareness and acceptance of alternative lending is growing. Small businesses that otherwise would not be considered creditworthy by banks are finding avenues for funding in the new alternative lending industry. This year, 7% of small businesses with credit needs are currently using alternative loan products. We expect this to double in the next year.
“Whether you’re bullish or bearish on alternative lending as it stands today, there is one piece of the puzzle that bankers cannot afford to ignore: Alternative lenders have revealed and exploited real opportunities not served by banks, said Jacob Jegher, Senior Vice President, Banking and Head of Strategy at Javelin.
Report: Build, Buy or Partner’ and Beyond: How Alternative Lending is Reshaping Small Business Banking assesses the alternative lending space, explores how these lenders are poised to disrupt and analyzes how banks can build, buy or partner with alternative lenders to address the market. The small business data in this report is based primarily on information collected in a random-sample panel consisting of 1,000 small and micro businesses in a February 2016 online survey. Javelin defines micro businesses as those with annual revenue between $100,000 and $1,000,000 and small businesses as those with revenue between $1,000,000 and $10,000,000.
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JAVELIN, a Greenwich Associates LLC company, provides strategic insights into customer transactions, increasing sustainable profits for financial institutions, government, payments companies, merchants and other technology providers. Javelin’s independent insights result from a uniquely rigorous three-dimensional research process that assesses customers, providers, and the transactions ecosystem.