Financial technology is changing consumers’ relationship with money, including how it’s earned, spent, and—thanks to fintech lenders—borrowed. Top fintech lenders are helping consumers fill financial gaps, buy homes, and even fund sustainable home renovations using innovative new technology.
These fintech lenders don't just fund conventional loans. They are revolutionizing lending by expanding access to under-served consumers, reducing loan application and processing time, and saving people money with reduced interest rates and fees.
Expanding access to lending services empowers all consumers by helping them gain control of their finances and, in some cases, end the cycle of debt. Expanding access also expands the market—providing an opportunity for more businesses to enter. Here is a look at the top fintech lenders and how they are changing the lending industry.
What are fintech lenders?
Fintech lenders leverage innovative technology to improve the lending process, including simplified application processes, new types of lending models like buy now pay later (BNPL), or using new data to make decisions. They can reduce the time required to access funds, increase transparency, and improve equality in the lending space. Fintech lenders provide access to a wide range of lending solutions, including small peer-to-peer loans, credit cards, mortgages, and home improvement financing.
Fintech is taking the lending industry out of the banker's office and straight to our phones. Still, fintech lending benefits both consumers and companies—while consumers gain access to more competition from lenders, faster credit lines, and lower fees, businesses gain access to a larger market and more insights into their borrowers.
How do fintech lending companies work?
Fintech lending uses digital technology to enable lenders to issue loans through websites or mobile applications. The fintech lending industry includes multiple business models, including peer-to-peer lending, debt consolidation, cash advances, credit builder cards, mortgages, investment loans, and business loans.
Fintech lending is disrupting the financial industry by streamlining the lending process, improving customer service, expanding access to traditionally under-banked customers, and offering more options to all types of consumers across the credit spectrum. Through fintech lending providers, more consumers than ever can borrow money and improve their financial health.
How big is the fintech lending industry?
The fintech lending space is projected to grow rapidly in the coming years, providing opportunities for more companies to enter the market.
In 2020, the fintech lending market was valued at $449.89 billion. By 2030, the industry is expected to be valued at $4,957 billion—a compound annual growth rate of (CAGR) 27.4 percent. Business lending is expected to generate the largest increase in market share.
One of the core causes of growth in the fintech market is a larger market of users. While traditional banks primarily rely on credit scores to determine loan eligibility, fintech lenders have access to more data, including employment history and financial spending habits. This data allows lenders to better analyze risk and extend financing to a larger pool of users.
Another cause of the industry's rapid growth is likely the ease of use for both consumers and lenders. Using Plaid, for example, lenders can quickly gain access to identity, bank account, and income data, so they spend less time on document collection and verification. Consumers gain access to loans from anywhere at any time using easy-to-navigate apps and websites and don’t have to spend hours manually uploading a trove of documents.
What are some of the biggest fintech lending companies?
One of the largest fintech lenders by valuation is Affirm, valued at around $5 billion in October 2022. In the 2022 fiscal year, the company had 14 million active customers and generated $364.1 million in revenue, a 39% increase YOY.
The secret to the company's growth is likely due to its niche within fintech lending. Affirm offers buy-now-pay-later lending (BNPL), which allows consumers to break large purchases into smaller payments over several months. In 2021, the BNPL market wave was valued at just over $5 billion, with an expected compound annual growth rate (CAGR) of 25% between 2022 and 2030.
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Top fintech lenders changing the finance industry
The top fintech lenders aren't necessarily those with the most customers or the highest valuation. The lenders on this list are those that align with Plaid’s values of promoting access to credit, financial freedom, and innovation.
SoFi helps consumers reach for financial independence
SoFi is an online banking and fintech lending company dedicated to helping people achieve financial independence. They offer a range of financial lending products, including student loans, auto financing, credit cards, mortgages, and personal loans. The company has more than 3 million active customers and reported over $1 billion in revenue for 2021.
SoFi offers a wide range of lending products in one place and allows users to earn points for completing financial health tasks, such as checking credit scores or opening the app several days in a row.
Rather than relying solely on credit scores to determine loan eligibility, the company uses alternative factors like the customer's employment status and repayment history with SoFi. They also offer loans to non-permanent residents with eligible visas who are often ineligible for traditional loans.
By pairing financial education with expanded access to loans, SoFi helps previously underserved banking consumers access capital, improve their lives, and build long-term wealth.
SoLo provides an ethical alternative to overdraft fees and payday loans
SoLo is a peer-to-peer platform that connects consumers in need of funds with individual investors willing to lend to them. The company is Black-led and a Certified B Corp, indicating they meet the certification's high standard for accountability and demonstrate a high level of social and environmental performance.
SoLo's goal is to help people with short-term cash flow shortages in an ethical (and affordable) way. Unlike traditional lenders, SoLo doesn't verify credit, charge interest rates, or even require users to leave their homes. Instead, they use Plaid to connect to new users' bank accounts and authenticate them. Streamlining this process means borrowers can access funds in as little as 20 minutes.
→ Want a faster way to set up loan disbursement and repayment? Plaid Auth provides account authentication for ACH transfers in as little as seven seconds
While the service is simple, the impact is revolutionary. By helping more banking customers access small loans, SoLo helps end the spiral of debt and discomfort that can occur when people rely on loans from family or predatory lenders.
Prosper expands access to credit with peer-to-peer lending
Prosper is another peer-to-peer lending solution making waves in the fintech lending space. Founded in 2005, the company serves more than 1.3 million customers and has facilitated more than $22 billion in loans. By connecting borrowers to institutional and individual lenders, Prosper is increasing access to lending and helping small lenders earn a return on their investment.
Prosper offers lower origination fees, making loans more affordable for borrowers. It also uses alternative means to verify eligibility. The company uses Plaid to quickly review their consumers’ financial data—without requiring users to find, scan, and turn in dozens of documents—and quickly deliver their decision.
→ Want to verify assets and account ownership faster? Plaid’s asset verification APIs instantly provide an up-to-date view of a borrower’s bank accounts and assets.
Prosper is helping disrupt the lending space by increasing access to underserved banking customers and providing access to funds in just minutes, rather than days or weeks.
Brigit helps consumer build credit + increase financial health
Brigit is a fintech lender helping consumers improve their credit and savings habits. In just two minutes, most borrowers can gain access to a small cash advance with no credit check, no interest, and no hidden fees. Founded in 2017, the company has helped more than 3 million Americans improve their financial health.
Unlike traditional lenders or payday loan providers, Brigit doesn't charge high-interest rates or require a deposit. For just $9.99 a month, consumers gain access to loans, balance alerts, and tools to improve their financial health. For example, Brigit's credit builder feature allows users to take out a small loan and make payments over 12 to 24 months. Each payment is reported to all major credit bureaus, potentially helping increase their credit score over time.
By helping users avoid overdraft fees and learn healthy savings habits, Brigit helps consumers stay out of debt, avoid payday loans, and save hundreds of dollars in overdraft fees every year. The subscription based-model is different; it will be interesting to see if other fintech lenders take a similar approach.
GoodLeap expands access to sustainable home upgrades
Sustainable energy may be good for the environment, but it can be hard on the wallet. This leaves many consumers unable to switch to greener energy. GoodLeap aims to change that by helping homeowners access financing and contractors for sustainable home improvements. As of 2022, GoodLeap has helped homeowners secure more than $18 billion in funding for sustainable home upgrades, primarily solar panels.
Expect to see climatetech and fintech continue to converge, providing consumers and financial services providers with more ways to calculate their impact on the environment.
Traditional lenders can take weeks to decide and issue funds and often deny applicants who don't meet traditional lending requirements. GoodLeap reduces lending barriers and connects borrowers with service providers and lending solutions, making going green easier. GoodLeap doesn't just provide funding; a portion of the company's profits are used to provide clean drinking water for thousands of people.
According to Plaid CEO Zach Perret, climate tech solutions like GoodLeap will continue to drive fintech growth in the coming years. Increasing access to green technology, such as solar panels, to previously underserved consumers is good for companies in the green energy space, but it's also helping our natural world.
Rapid growth in fintech lending benefits borrowers and companies
The fintech lending market is likely to explode in the coming decade, creating the perfect environment for disruption. Currently, under-served communities are benefiting from tools that help them get out of debt, make the switch to climate-friendly energy sources, and increase their financial health in the long-term
For fintech companies, the industry growth represents a massive opportunity to innovate and expand offerings to serve customers often left behind by traditional banks. In the future, that innovation may include lending solutions for industries ripe for disruption, such as student loans, electric cars, and green energy.