In a new report, Celent examines the US online lending market and predicts 35% of new loans will be generated online by 2005.

Despite a decline in the number of banks in the last five years, the market continues to be attractive for online lending systems. The market has shown growth in new loan sales in 2001, with a potential for Internet loan origination to increase.

The loan origination market is quite mature and saturated, while the Internet lending system market is still in the early stages of development. However, the increasing need for better management of customer relationships will drive fuller automation of this technology.

According to Isabella Fonseca, author of the report, " We foresee an increase in IT spending on loan origination systems by banks in the next three years, especially as the need to provide fully integrated Internet lending capability becomes more prominent. Although financial institutions are moving towards sophisticated Internet lending technology, human interaction remains an important part of the process. We expect call center and online customer service technologies to leverage and complement Internet lending processes."

This report will recommend which paths banks and technology vendors ought to follow in order to be successful in the Internet lending market.