Tight Credit & Lender Opportunities
- Millions of consumers are seeking alternative credit as traditional lending sources face increasing strain.This shift opens opportunities for technology-driven lenders catering to those underserved by conventional banks.
- Mainstream banks and credit unions are reassessing their lending criteria for both consumer and commercial loans.
- The Federal reserve Bank of New York reported in May that late-stage delinquencies on revolving debt have increased year over year.
As traditional lending tightens, the landscape of credit is shifting dramatically, creating a surge in alternative credit options. News Directory 3 reports on the emerging opportunities for FinTech companies and the underbanked consumers they serve.Explore how Propel Holdings, leveraging artificial intelligence, is transforming credit assessments and expanding access to vital financial services for millions. Witness the rise of AI-powered platforms that evaluate creditworthiness using consumer-specific data beyond traditional scores, enabling faster and more inclusive credit decisions. Discover what’s next in this evolving financial ecosystem.
Alternative Credit Options Expand as Traditional Lending Tightens
Updated June 12, 2025
Millions of consumers are seeking alternative credit as traditional lending sources face increasing strain.This shift opens opportunities for technology-driven lenders catering to those underserved by conventional banks.
Mainstream banks and credit unions are reassessing their lending criteria for both consumer and commercial loans. Clive Kinross, CEO of Propel Holdings, told PYMNTS that the credit pipeline is currently “as tight as it’s been over the last 10 years.” Macroeconomic uncertainties are pushing consumers, who might or else qualify, into diffrent market segments.
The Federal reserve Bank of New York reported in May that late-stage delinquencies on revolving debt have increased year over year. Household debt reached $18.2 trillion in the first quarter, a 0.9% increase from the previous quarter and a 2.9% rise from the previous year. This represents the lowest annual growth rate since the first quarter of 2021.
For companies like Propel Holdings,specializing in alternative lending for underserved consumers, this habitat presents a chance to serve individuals often overlooked by traditional institutions.
“There’s a big distinction between riskier consumers and risky business,” Kinross said.
Kinross challenges the conventional banking view that lending to underbanked populations is inherently high-risk. He argues that with the right tools and processes, particularly using artificial intelligence, risk can be accurately understood and priced.
Propel’s technology platform, underpinned by AI, is central to its strategy. This platform enables cash flow underwriting,assessing creditworthiness using consumer-specific data rather than relying solely on traditional credit scores.This AI-powered approach allows Propel to make credit decisions for 80,000 to 90,000 consumers daily, with decisions rendered in seconds.
Kinross estimates that 35% to 50% of the population is underbanked and underserved by traditional banks. Without viable alternative credit options, these individuals often resort to less favorable options like payday loans.
Propel aims to offer “vastly superior credit” to these consumers, according to Kinross. The typical Propel customer is an older millennial or younger member of Generation X, aged 35 to 54. The company primarily offers lines of credit,with average limits between $2,000 and $3,000. customers typically draw down about 70% of this limit, resulting in an average outstanding balance of approximately $1,800.
What’s next
Propel is exploring expansion through its lending as a service (LaaS) offering, partnering with other institutions to access lower APR markets with higher loan sizes and substantial capital requirements. This B2B play allows propel to provide underwriting expertise, marketing, and servicing using its technology platform, without using its own balance sheet or taking on the economic risk of the loans.