United States Digital Lending Market Size

United States Digital Lending Market Analysis

The United States Digital Lending Market size is estimated at USD 457.29 billion in 2024, and is expected to reach USD 801.25 billion by 2029, growing at a CAGR of 11.87% during the forecast period (2024-2029).

Market expansion is anticipated to be fueled by the advantages provided by digital lending platforms, such as improved loan optimization loan process, quicker decision-making, compliance with regulations and norms, and improved corporate efficiency. Traditional lending platforms required physical contact and human engagement at every stage, which prolonged processing times and raised the possibility of human error. However, digital lending platforms allow banks to automate the loan process, improving consumer satisfaction.

• The United States is one of the largest and most advanced markets for digital lending globally due to its early adoption of digitization in various sectors. Also, factors such as the strong economy and robust presence of prominent solution providers, coupled with strong investment by government and private organizations for the development and growth of research & development activities, are poised to drive the demand for digital lending in the region.
• Funding is a crucial element of the digital lending business model. There are three major funding models used by digital lenders: Marketplace lenders, Balance sheet lenders, and bank channel lenders. Several digital lenders have been tapping multiple funding models as they grow.
• Further, banking institutions retain certain fundamental competitive advantages. Arguably the most important is their access to insured deposits, which affords them low-cost capital. Regulatory concerns have likely caused banks to hesitate when adopting new technologies, but banks are increasingly looking for points of entry to the fintech space. It is expected that many banks will partner with existing fintech companies to have their cost advantages with the fintech's technological capabilities.
• By combining their technological expertise with banks' lower cost of capital, these partnerships could enable banks to provide more efficient customer experiences at lower rates and open them up to previously untapped customer segments. Also, in the United States, platforms engaging in credit origination can be subjected to licensing requirements in each state. For this reason, many platforms partner with the banks to originate loans agreed online.
• Owing to the COVID-19 pandemic, SMEs in the region faced challenges in raising funds during the crisis to keep their businesses operating. Digital Lending is expected to find several opportunities, especially among SMEs, for growth and adoption. Further, during the COVID-19 pandemic, the government aimed to support the people. Moreover, given widespread job losses, wage reductions, and a severe liquidity shortage, banks and financial institutions (FIs) anticipates to experience an increase in credit costs and non-performing assets ratio as the effects of COVID-19 on the lending industry develop. Lenders can benefit significantly from the use of technology to assist them in adjusting to the new normal.