- Recent years have seen the development abroad and in Israel of online credit intermediaries, who intermediate between borrowers and lenders in providing loans. They enhance the competition in credit and increase access to the credit.
- The intermediaries make considerable use of technology. This greatly reduces operating costs and shortens the loan approval process.
- Most of the intermediaries do not bear the credit risk themselves; the lenders bear that risk.
- The balance of credit that has been provided until now through online credit intermediaries worldwide is tiny, but the growth rates of credit through this source are very high.
- In 2017, a legal amendment was approved by the Knesset, which subjected the online credit intermediaries in Israel to supervision. Among other things, the intermediaries will be obligated to publish information on the risk of the borrowers’ portfolio. There was little such information available until now.
- As online credit intermediaries only developed in recent years, and have not yet dealt with a full business cycle, an increase in the interest rate environment will present a marked challenge for their operation.
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