P2P Lending and investment. Sharing Economy

P2P and Institutional Investment

P2P Lending and investment. Sharing Economy

Sharing the wealth

You can become a boutique hotel through renting a room on Air BnB, or a retailer through eBay, or even an ad-hoc taxi service by renting your car out. With the rise of sharing platforms giving control back to the individual, peer to peer (P2P) lending is a natural step forward in this economy, now you can become a money lender through online platforms.

P2P lending has been around for a number of years and has been growing exponentially year in year out, however it is now hitting the headlines with institutional investors starting to eye up the UK industry. At the moment, you or I can log onto P2P sites, such as Funding Circle, RateSetter, Zopa and LendInvest and lend to borrowers who want loans for cause such as SME start ups, buying property, or to just pay of other debts. The economic crash gave rise to the little man fighting back against the system, however now the system is interested once again in the little man, with institutional investors eyeing the prize of high rates of return on these online platforms, sometime as high as 13 per cent.

The US market is currently an institution to peer market, rather than peer to peer and many are worried that if the UK P2P market begins to accept large injections of cash from institutional investors, the everyday lender you or I will be cut out of the game, destroying the traditional P2P ethos. Although institutions are likely to get involved, due to it being too good an opportunity to miss, the balance is unlikely to be waived in the favour of the big boys. They might bring large amounts of money with them and they could provide a huge boost to lending capacity, however many of these online platforms grew from entrepreneurial leaders who were fed up with the everyday man’s treatment from banks and they resolved to change it. This ethos runs deep for many of the big players in the P2P market and therefore it is more likely that they will strive to create a balance with institutions, putting specific loans aside for them, whilst leaving some exclusively reserved for the likes of you and me.

In my opinion institutional investment in P2P platforms can only be a positive move forward, as the P2P market will only continue to grow, with many facets cropping up, one of those being the role institutional money will play in the P2P world.

Want to know more about how P2P operates and how institutional investors can get involved in this growing market? Join us for the inaugural Peer to Peer Lending and Investment Briefing on 15th October in London to find out more about this key issue. Keep an eye out for more information regarding the event soon.

Image [from Google]

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