Spike in bad loans raises scrutiny of P2P credit models

Jump in delinquencies at some lenders prompts questions over modelling practices, but firms stand by their approach

Machine learning techniques, big data management, advanced fraud detection measures: online lenders certainly talk a good game on why they’re able to make better decisions than traditional lenders about who to loan money to. But a recent spike in delinquencies and charge-offs for online consumer loans in the US is raising questions about the effectiveness of these techniques for credit risk modelling.

Certainly, the past 12 months have been humbling for some online lenders. Lending Club and

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