Online lenders are often smaller and less-experienced, leaving them open to additional risk compared to traditional lenders. Pierre Buhler outlines the risks facing digital lenders in this The Information article.
He explains how digital lenders differ from more established lenders, “The biggest may be the fact that their borrowers tend to have lower credit scores than customers of older banks. As a result, any economic downturn that hurts consumer credit quality generally could disproportionately hurt the digital lenders”
He goes on to acknowledge the uncertainty surrounding the credit world in recent years, “every pundit in consumer credit has been consistently wrong.”
