Trends, Threats, Attractions Of P2P Crowdfunding


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How will P2P lending fare in a downturn? Can the industry improve securitisation practices? Why did growth slow last year? Is China really the most exciting market? What will consolidation mean for the industry?

These are just some of the questions posed by Harriet Green of CityAM, who writes an extended column on nine trends in peer-to-peer (P2P) crowdfunding.

"According to research from Lending Club [a large US P2P lender that floated in December 2014], 50 per cent of millennials expect fintech to radically change financial services," writes Harriet (pictured, below).

HarrietGreen

"And 70 per cent think consumer finance will look fundamentally different in the next five years. Crucially, over a third (33 per cent) think they won't need financial services from a bank at all.

"While this provides those in the online lending industry with an unprecedented opportunity, platforms are also acutely aware of the continuing need to create a customer experience which enables them to acquire new, and retain current, users."

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Harriet gets much of her research from a recent P2P crowdfunding conference in San Francisco. Here she takes on board US comments on secondary markets in P2P (lenders selling on their loans), which has been a vigorous part of our business at Money&Co.:

"As the industry gets older, and with concerns of an economic downturn not going away, increasing numbers of industry commentators are stressing the need for liquidity via a secondary market in P2P lending – and, therefore, for the need to securitise loans.

"Hyung Kim, who's firm Ldger provides platform-based structuring for alternative finance products, says that while good efforts are being made to bring transparency to existing structured products offered by platforms, there needs to be more standardisation in the alt fi securitisation. Currently, levels of disclosure vary considerably across the industry."

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The current B+ rated loan offering from JFG Limited, is now in receipt of bids for more than 49 per cent of the £307,000 sought by the borrower. The loan has an indicative gross yield of 9 per cent. Bids for the loan show a current average of 9.6 per cent at the time of writing.

Prospective lenders should bear in mind that more expensive offers of funds will be knocked out by cheaper ones, should the loan be filled ahead of deadline. The borrower also has the right to decline an offer of credit. The loan has a lifespan of 60 months.

Bear in mind that capital loaned is at risk. Read the warnings on site in Lend, our Home Page, FAQs and elsewhere.


Tags: cityam, P2P, trends

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