Private credit has shifted from corporate finance to consumer lending, with firms like Elliott, Carlyle, and Fortress purchasing billions in loans from FinTech’s. Companies like Klarna, SoFi, and Upstart, once dominant, have struggled with high costs and rising interest rates, prompting them to offload loans. 

By moving loans off their balance sheets, these FinTech’s hope to boost new lending, though the long-term financial impact is uncertain. Upstart, known for its AI-powered underwriting, faces substantial risks from loan defaults, leading to significant losses. 

Private investors, focused on high returns from loan interest, are seizing opportunities, as seen in deals that boosted stock values for Upstart and SoFi. Despite FinTech’s’ ambitions to disrupt traditional banking, private credit is now positioned to challenge their dominance.

Finsum: We’ll see if private credit can improve where fintech has not, but this could drastically change the industry.