By: Jer Trihouse. Alternative Financial Lenders (AFS) which includes payday loans, installment loans, pawn, title loans… and the new variation of FinTech lenders such as Lendup, Prosper, Lending Club, Avant, Enova, Elastic, OnDeck… are getting “creamed” of late! In light of the devestation of stock prices and their immediate expectations, and the fact that gasoline prices are well under $2/gal in many of our demographic markets, it’s no surprise Elevate Credit (NYSE:ELVT) and LoanDepot decided to pull their IPO, nor for CSH to drop their unsecured payday loan products like a hot potato – other than in Ohio. QC has applied for delisting by the NASDAQ. (Low gasoline prices is killing the pawn industry as well.)
The CFPB represents a HUGE hammer that is about to smash these online business models to bits. City ordinaces are not helping brick-n-mortars either. None of us know how bad this will be. Of course, the FED take’s delight in this. I only wish I had been at the after party when they announced a $1.2 BILLION DOLLAR fine against Scott Tucker!
Folks, in today’s economic environment and in combination with the unknown devestation the CFPB COULD level on all of us, your focus must be on cutting costs while developing new products with lower margins. It’s back to funamentals; onboarding new customers at a CAC that makes sense for your financial metrics and nurturing that customer over their lifetime.
Collaboration is another area offering unique opportunities. Witness Uber and their drivers access to loans.
Finally, my sources tell me the tribes and the mono-line pawn shop owners are salivating over the potential refercussions of the CFPB. Time will tell. But, it’s a certainty that fewer consumer loan options will drive consumers into the hands of tribe lenders and pawn shops.
Here’s an interesting article by Carter Dougherty
Elevate Credit – Innovative Financial Services Or Online Loan Sharks? Jury’s Out
Elevate Credit – Innovative Financial Services Or Online Loan Sharks? Jury’s Out Depending on how you feel about borrowing and lending, Texas-based Elevate Credit could be the first hot new tech stock of 2016 — or an ignoble, consumer-exploiting failure. The company, backed by Silicon Valley venture capital heavyweights, set out to reinvent small-dollar lending over…