Peer-to-peer (P2P) or marketplace lender – or boutique bank? This is more than an issue of names. It's all about who provides the capital that borrowing businesses need to grow. If the lenders lending via platforms like Money&co.'s are exclusively big institutions, then P2P seems a strange name (even though an insurance company is a single legal entity, with the same legal status as a private individual).
Alt Fi takes a perceptive view of this changing market: "Looking at the webpages of the three largest members of the P2PFA, an interesting observation can be made.
"Only two of the three platforms, Zopa, and Ratesetter, now call themsleves peer to peer lenders. The third, Funding Circle, has opted for the moniker 'marketplace lending' to describe what it does. Is this as a result of increasing institutional volume?
"Can platforms that facilitate large amounts of institutional volume continue to call themselves 'P2P'? Opinion is split as to whether the increasing volume of institutional lending through Alternative Finance platforms in the UK is a good or a bad thing. P2P purists are concerned that institutional lenders may crowd out the retail investor and reduce returns. Others argue that the inclusion of institutions is a necessary step in the continued evolution of the industry into a new asset class, rapidly enabling the industry to scale in a way that retail investment could not do alone and also bringing a greater level of professionalism and scrutiny."
Money&C0.'s position is clear enough: we intend to keep our platforms open to individuals. Of course, we may take some money from big institutions one day – but we believe in the P2P principle, and we will continue to keep bringing people together with businesses. That way, our lenders can achieve excellent returns, and businesses can get the capital they need to grow.
Take a look at the graphic with this article, which compares "P2P" returns from the biggest platforms in the sector with money-market and banking alternatives.
Remember lending carries risk. We vet our borrowers very carefully, but capital loaned is at risk. Please read the warnings on our Home Page and in our Frequently Asked Questions.
Discovering The Power Of The Crowd - £40 Discount
Get a £40 discount on next week's Discovering The Power Of The Crowd Conference. Money&Co. registered lenders can meet crowdfunding experts in London next week for a day that promises to be more than just a talking fest, but something of practical use for the modern investor and lender.
The objective is to provide information and commentary on:
- How to provide a balanced portfolio of high-yield debt and risk-weighted equity for individual investors and lenders
- How to provide seed and mezzanine equity capital for younger SMEs, and loan credit for more mature companies