Investors love growth, and as we approach the longest sustained period of growth in the history of the United States, the business climate has been almost unprecedented. The Dow Jones Industrial Average is hovering around record highs and unemployment is at its lowest level in nearly two decades.
These robust economic conditions have supported and stimulated lending activity as well as an explosion of interest in the financial technology arena. Venture capital-backed financial technology companies disrupting traditional banking by effectively unbundling products and services have raised a record $40 billion from investors globally in 2018, up 120% from the previous year, according to research by data provider CB Insights.
However, as we enter the last six months of 2019, signals suggest that economic and regulatory changes could expose the fundamental weaknesses of many consumer lenders. This is exacerbated by growing fears of a prediction recession arriving before 2021; concerns compounded by the most recent trade war with China and slow wage growth that has been largely offset by inflation.