- Last year, Insider Intelligence rounded up some of the top alternative lending companies that were able to meet consumers’ growing expectations for fast and efficient loan applications and digital payments.
- In the interim of publishing this year’s list of top alt lending companies, we are sharing 2023 updates to last year’s list to keep you updated on where these companies stand today.
- Do you work in the Banking industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.
Consumers are attracted to the idea of nonbank loans, as they allow users to complete loan applications and payments digitally, without initial fees or high interest rates. What’s more, alternative loan options are quick and easy alternatives to making cash advances, which can be complicated and expensive.
With these consumer demands in mind, alternative lending companies and nonbank financial institutions—including nonbank mortgage lenders, commercial lenders, and consumer finance companies—are partnering with legacy banks to promote long-term growth and are adapting the latest digital technology to make financial transactions increasingly efficient for users.
In the interim of publishing this year’s list of top alt lending companies, we are sharing 2023 updates to last year’s list to keep you updated on where these companies stand today.
1. Quicken Loans (Rocket Mortgage)
In 2015, Quicken Loans transformed the mortgage industry with the introduction of its online mortgage application that reportedly takes less than 10 minutes to complete. With no other viable challengers to the status quo in sight, this online application was immediately appealing to tech-savvy applicants.
Quicken Loan’s fully digital mortgage application tools and on-demand phone support not only propelled the company into the digital mortgage sector, but it also altered the traditional home loan application process and opened the door to smaller online lenders.
Due to the fast-growing US housing market, Quicken Loans became the largest mortgage lender in the US in 2020. The company funded $313.4 billion during 2020, more than doubling the $141.6 billion it originated in 2019, according to a report by the Consumer Financial Protection Bureau.
Update: Quicken Loans was rebranded as Rocket Mortgage when the company went public in July 2021, to stay consistent with its parent company; Rocket Companies. Rocket Mortgage originated more than 1.2 million loans worth $340 billion in 2021, according to HMDA data.
Despite the challenging conditions currently affecting the real estate industry, Rocket Mortgage has demonstrated that it can adapt to the changing market. For example, Rocket ranked sixth in the industry in purchase volume in 2020, up from 12th place in 2014, according to Inside Mortgage Finance. What’s more, Rocket announced a plan to issue 25% of all U.S. mortgages by 2030, which would nearly triple its current share.
LoanDepot has originated more than $275 billion since the business got its start in 2010. The California-based online mortgage lender became popular in the mortgage loan market in 2017, when the company introduced a suite of tools that would allow consumers to fill out mortgage loan applications from their smartphones.
Update: LoanDepot has fallen to the seventh-largest mortgage lender in the nation, according to Inside Mortgage Finance‘s rankings, as the company’s origination volume has decreased from the previous year.
In an effort to offset this decline, LoanDepot is taking steps to downsize its workforce, consolidate operational functions, and diversify its less interest rate-sensitive mortgage products—including a recently-launched home equity line of credit (HELOC).
LoanDepot is also appealing to a consumer interest by committing to provide credit to underserved communities. To that end, the lending company has partnered with National HomeCorp—a homebuilder specializing in affordable single-family homes—to create NHC Mortgage.
PennyMac introduced its first public offering in 2009, before launching the Pennymac Correspondent Group in 2010. PennyMac Financial Services, Inc. went public in 2013 with a total servicing portfolio of about $50 billion in unpaid principal balance.
PennyMac has stayed ahead of its alternative lending competitors by adapting to consumers’ growing interest in attaining digital loan support and being able to submit documents electronically. Additionally, the company offers a wide variety of loan options—ranging from conventional and jumbo loans to U.S. Department of Veterans Affairs and Federal Housing Administration loan and mortgage programs.
Update: As of January 2023, Pennymac is now the largest correspondent lender, a leading servicer with almost $540 billion in unpaid principal balance, and a trusted capital partner to independent originators and mortgage businesses nationwide.
Founded in 2006, OnDeck led the charge in using data analytics and digital technology to make real-time lending decisions and quickly deliver capital to small businesses online. In 2018, OnDeck launched ODX to help banks build their own digital small-business lending products. Enova acquired OnDeck in 2020, and has since been focused on delivering a faster and more efficient experience.
Update: In May 2022, OnDeck announced a growing list of tie-ups—including SoFi Technologies, Inc. (SoFi) and LendingTree—specifically aimed at helping small businesses around the country. These strategic partnerships have helped OnDeck secure its spot as a top alternative lending option for small- and medium-sized businesses (SMBs).
Today, OnDeck offers a wide variety of term loans and lines of credit customized according to the personal needs of small business owners, and has provided over $14 billion in loans to customers in 700 different industries.
5. Social Finance (SoFi)
SoFi’s success as an alternative lending platform is largely due to its continuous commitment to expanding its suite of financial services with new and relevant offerings. While SoFi was initially intended for student loan refinancing, the company has since expanded its offerings to include mortgage loan refinancing, mortgages, and personal loans.
Additionally, the company launched SoFi Invest—which offers customers both active and automated investing options with no fees—and partnered with insurtechs Lemonade and Root, to add three more types of insurance to its product suite.
Update: According to the financial results that were posted on the SoFi website this week, the lending company grew its total Financial Services products by approximately 635,000 in the fourth quarter of 2022, bringing the total to approximately 6.6 million at year end.
The company expects to generate $430 to $440 million of adjusted net revenue in the first quarter of 2023, up from 34% to 37% YoY.
6. Reali Loans
Reali Loans, a real estate and fintech platform focused on transforming home buying and selling—got its start in 2016. The lending company quickly gained popularity as an online alternative lending platform with no origination fee or upfront charge.
Reali’s platform appealed to tech-savvy customers looking for a convenient way to seek loans, by allowing users to complete a loan application completely online. For example, customers could upload and sign documents electronically and then track the progress of their loan through the user dashboard.
Update: Due to challenging real estate and financial market conditions, as well as an unfavorable capital-raising environment, Reali announced in August 2022 that it would begin the process of shutting down its business.
Kabbage is another online lending platform that earned a spot on the list of top nonbank financial institutions. The startup offered business-to-business (B2B) operations, and secured a $200-million revolving credit facility in July 2021.
Kabbage was particularly popular in SMB lending, as the lending company provided a suite of digital services where customers could link business information online to get an automatic financial review. Kabbage also allowed users to withdraw from their line through three distinct methods: logging into a computer, using a mobile banking app, or swiping a Kabbage Card.
Update: After selling most of its assets to American Express Co. in 2020, the lending firm filed for bankruptcy, after facing federal investigations and private lawsuits for its alleged mishandling of Paycheck Protection Program loans.
PayPal is a popular digital payments service that offers several peer-to-peer (P2P) payment platforms— an industry that Insider Intelligence projects to grow at a 42.7% five-year compound annual growth rate to hit $574 billion by 2023.
In addition to P2P payments, PayPal offers a small business lending program. This includes PayPal Working Capital—which allows merchants to apply for an interest-free loan up to $200,000, receive funds almost instantly, and repay the loan plus a flat fee as a percentage of daily sales. Additionally, this encompasses PayPal Business Loans—which offers a more traditional line of business financing up to $500,000.
What’s more, PayPal offers security services—including alerts of suspicious activity—as well as easy check-out options where users can leverage the platform to buy online. By adapting to consumers’ preferred digital channels and offering both personal payment and business lending options, PayPal has become popular among a variety of users.
Update: According to retail and fintech analysis site PYMNTS, as financial apps go more mainstream, “PayPal remains the money-storing app to beat for banks.” According to the site’s January 2023 consumer survey, PayPal is the option respondents trust most for storing their money—coming in at 84.5%—versus 59% who prefer a primary bank and 48.6% who favor Apple Pay.