Fintech Lending: A Study of Expectations Versus Market Outcomes

Abstract

This paper documents the expectations for the fintech lending industry, which has emerged in this decade, and compares such expectations to market outcomes. It presents an evidence based analysis for policy making decisions. Part one of the paper explores expectations – possible benefits and risks of fintech lending – through large-scale surveys and interviews of industry, consumer and government stakeholders. Part two of the paper examines market outcomes – benefits and risks that have been realized or failed to materialize, as documented by studies of substantial data sets of various types of fintech loans. This includes examination of expanded access to credit, lower costs, predatory terms, fair lending risks, and lack of transparency. After comparing expectations and outcomes, the paper explores policy implications, particularly the implications for chartering of special purpose national banks by the U.S. Comptroller of the Currency.