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The Strategic Mistake of Marketplace Lending

Chess

 

 

The marketplace lending industry in the U.S. has done very well lately. Its players, however, underestimate their disadvantage within the current regulatory framework. The incumbent banks are backed by government guarantees and access to Federal Reserve liquidity. This will give banks a decisive edge over marketplace lending in the next financial crisis. Focusing on cost-efficiency and quality will not be enough for marketplace lending to succeed. They have to reinforce their strategic vision of disintermediating the financial system and to push for a regulatory reform.

 

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