Personal loans are "tricky to underwrite" because consumer credit scores are high at the time of origination and then drift downward, says Roger Hochschild, who recently took over as the head of Discover Financial Services.
Four lenders, led by Sallie Mae, have long dominated the market for private student loans. But they could soon face new competition from Navient and Nelnet.
David Nelms said that many digital lenders do not understand how to underwrite personal loans properly, and he took a dig at their lack of profitability. The upstarts say their industry's ability to attract capital speaks for itself.
