Happy New Year everyone. Here is my third annual predictions post where I review my previous years predictions and make some new ones for the new year.
Review of my 2013 Predictions
Lending Club will issue $1.62 billion in loans in 2013 Clearly I underestimated Lending Club on this one. As I said one year ago I expected the growth rate to slow down at Lending Club in 2013 from the 179% year over year growth experienced in 2012. Clearly I was wrong here. Their growth rate actually accelerated to 188% in 2013.
Prosper will issue $340 million in loans in 2013 I was a lot closer on my Prosper prediction with the actual loan volume coming in at $357 million. I have to admit, though, after their slow start to the year I thought my prediction was going to end up being overly optimistic. But Prosper had a phenomenal fourth quarter that exceeded everyone’s expectations.
The Prosper class action lawsuit is settled I am happy to report that I was right on this one. The Prosper Class Action lawsuit that was brought in 2008 was settled in July for $10 million payable over three years.
Peer to Business Lending will boom with at least five new companies I think I was right with this prediction as peer to business lending did indeed boom in 2013. I reviewed several new small business lenders on the blog including Funding Circle USA (formerly Endurance Lending Network), P2Binvestor, Funding Community and Dealstruck. Other platforms that launched in 2013 were Fundation and Quarterspot (review coming shortly).
Lending Club will release a bankruptcy remote vehicle for all investors I was completely wrong here. Lending Club made no movement towards creating a bankruptcy remote vehicle for all investors. I think the fact that they are now profitable and in a very strong financial position has probably made this less of a hot button with investors.
My 2014 P2P Lending Predictions
Now on to 2014. Let me look into my crystal ball and give five predictions for the coming year.
Lending Club will issue $5.3 billion in new loans
While I have heard no official projections from Lending Club about their volume goals for 2013 their growth rate has to slow down eventually as they start coming up against the law of large numbers. But given this is their IPO year I expect growth will not slow down too much – the $5.3 billion total will represent annual growth of 157% down from their 188% in 2013.
Prosper will issue $1.1 billion in new loans
Prosper’s fourth quarter has really set them up for a potentially great 2014. Given the extraordinary growth in recent months I think they will carry that through into 2014. I am predicting an increase in the rate of growth to over 200% year over year which will put Prosper at around $1.1 billion in new loans.
Google launches a joint venture with Lending Club around Google Wallet
In May of last year Google announced their investment in Lending Club but since then all has been quiet. However, I think we will see some movement here, possibly before the IPO, that will generate a lot of excitement. The logical place for this alliance is with the Google Wallet product, a mobile payment system developed by Google. I think we will see Lending Club loans incorporated into Google Wallet so consumers will be able to choose Lending Club as a payment method at the point of sale or online.
Mobile becomes widespread for both online consumer and business lending
Speaking of mobile I think we will see much more movement in this area in 2014. There has been a distinct lack of a mobile strategy at the major p2p lenders and I think that will change in 2014, not so much on the investor side but on the borrower side. We will see see more consumers and small businesses take out loans via their mobile phones than ever before as the race to acquire borrowers heats up.
Prosper will be profitable by Q3 2014
Prosper has lost money every quarter since it began in 2006. This long run of red ink will end in 2014 and I predict we will see a profitable quarter (numbers based on their official SEC 10-Q filings) at Prosper by the third quarter this year.
Now, there is one prediction I have not included here because it is so likely that I can’t really call it a prediction. I am referring to the Lending Club IPO. Renaud Laplanche, the CEO of Lending Club, first stated his intention to take Lending Club public back in December 2012 and he continues to reaffirm that regularly in interviews with the press. The expected time frame is some time in the first half of the year and with the hot IPO market right now we may see this sooner rather than later in 2014.
What do you think? Am I way off base here or do you have any predictions of your own? As always I would like to hear your comments.
Peter Renton is the chairman and co-founder of Fintech Nexus, 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.