How does online bank expansion (digital-only depository institutions that originate loans without human intermediation) affect consumer credit market structure? Using loan-level data from Germany, we show that online banks cherry-pick low-risk borrowers, generating adverse selection for traditional banks. We develop and test a model in which online banks have lower costs but weaker screening because they rely solely on hard information. Online banks offer substantially lower rates to low-risk borrowers, but this advantage declines with credit risk, creating a crossover point beyond which traditional banks become more competitive. Using historical branch density as an instrument, we show that supply-driven screening differences contribute to this pattern. Extending the framework to fintech lenders reveals market segmentation: online banks serve the lowest-risk borrowers, traditional banks the medium-risk segment, and fintechs the highest-risk segment. Over time, the traditional online rate gap widens, consistent with deteriorating borrower pools at traditional banks. A shift-share design---combining pre-determined district banking composition with national branch consolidation rates---provides causal support. Our findings highlight that technological development in credit markets can generate important distributional consequences.