Decelerating growth curves, emerging regulatory guidance, and intensifying concerns from investors are fueling doubts about the long-term potential of marketplace lending—an industry that some market observers have estimated to be worth $1 trillion globally by 2025.

Mercator Advisory Group’s research note, Bad News Comes In Threes: Assessing the Future of Marketplace Lending, delves into the myriad of negative developments that have converged recently around the largest U.S. marketplace lenders— OnDeck Capital, Lending Club, and Prosper Marketplace—and provides an outlook on how those developments may reshape the marketplace lending industry (and its intersection with traditional consumer and small business lending) over the next 12 to 18 months.

“Venture capitalists’ expectations for the marketplace lending industry have long outstripped the performance of even the most successful marketplace lenders,” comments Alex Johnson, Director of Mercator Advisory Group’s Credit Advisory Service and author of the note. “The recent struggles of OnDeck, Lending Club, and Prosper, while painful, represent a healthy course correction for an important area of financial technology innovation.”

This note contains 14 pages and 3 exhibits.

Companies mentioned in this note include: Avant, DriverUp, JPMorgan Chase, Lending Club, OnDeck Capital, Prosper Marketplace (Prosper), Radius Bank, Social Finance (SoFi), WebBank, and Wells Fargo