P2P News – All The Latest Updates
Hi guys and welcome to our second P2P news edition of the month! As usual, we will be giving you a quick snapshot of the latest news with five key stories. We focus on an array of P2P topics from P2PFA releases P2P lending data for Q2 to looking at how P2P is heating up the world of fintech. Missed our last round-up? If so, catch up here.
P2PFA Releases Peer to Peer Lending Data for Q2
The UK Peer to Peer Finance Association (P2PFA) recently released its second quarter numbers for 2016.
Their data indicates that cumulative lending now stands at £5.8 billing with £658 million in lending occurring during Q2. last year, (in the same quarter) total new lending registered at£507,936,000. But Q2 numbers are a dip from Q1 2016 when total new lending came in at £715,421,000. Both the number of borrowers and lenders increased from Q1 to Q2. Zopa remains the largest lender by cumulative total followed by Funding Circle. (Crowdfund Insider, July, 2016)
Chair of P2PFA, Christine Farnish CBE mentioned in a recent Crowdfund Insider article that peer-to-peer lending is now a mainstream alternative finance product – continued expansion in the number of investors and borrowers has clearly shown this,more than 150,376 lenders and 332,107 borrowers currently using P2PFA platforms.
ThinCats, which is a P2PFA member, company founder Kevin Caley also shared his thoughts in the article, Mr. Caley stated : alternative finance “is playing a major role in bridging the UK’s business funding gap.”
He is also stressed that although there is still a lot of uncertainties due to the Brexit vote, peer-to-peer platforms won’t be sitting on their hands and will continue to bring disruptive innovations to the market as well as being an alternative to traditional market based lenders.
Read more on the P2PFA research here.
UK Invoice Finance Platform, Raises Another £7.2M
MarketInvoice, which plays in the peer-to-peer lending space by enabling U.K. businesses to raise money from institutional investors and high net worth individuals by ‘selling’ outstanding invoices, has raised a further £7.2 million. (Tech Crunch, July 2016)
MCI Capital, a listed Polish private equity group as well as existing backer Northzone have been involved with MarketInvoice’s funding – which now brings the total investment to just over £18 million.
The company told Tech Crunch that the raised funds will be used to help sustain its claimed position as the leader in invoice financing in the U.K., and also for product development.
In a nutshell, MarketInvoice works with hedge funds, asset managers, family Offices, and high net worth individuals. In addition, real-time auctions are used to determine how much of an invoice’s value will be provided as capital (minus the bidder’s cut), the company then makes money by also taking a small cut.
To sum it up, they enable businesses (from SMEs to larger companies) to free up money owed before an outstanding invoice is paid, thus providing much-needed liquidity. In turn, it gives investors a new asset class. Invoice finance and other forms of P2P lending play into a narrative that has seen banks reluctant to lend to small and medium-sized businesses and interest rates at a historic low, as Tech Crunch’s Steve O’Hear mentions.
Image source : Tech City News
Governance and Regulations are Key to the Future of P2P
As mentioned in previous P2P news blogs, governance and regulations are key for the p2p industry, especially in countries such as China which has seen a lot of fraudulent activity (the Ezubao case springs to mind which was briefly mentioned in our last P2P round-up).
So why do we need it? Regulation and governance helps to protect both the investor and borrower, and gives the sector added credibility and will only serve to boost awareness and participation, as Money observer’s Chris Maule points out in an Interactive Investor article.
Here in the UK, measures have already been put in place, the industry here is known for being transparent, for example, the P2PFA make sure its members publish their loan books, reveal bad debt rates and include five years’ worth of credit performance.
The actions of the recent Lending Club case (which you can read about in one of previous P2P blogs) should be a sobering reminder of what could happen if they fail to play their parts in developing a transparent and honest product.
Image source : The Connectivist
P2P Funds Are Unaffected by Brexit vote
Peer-to-peer (P2P) lenders could stand to gain a greater market share as some banks have reduced appetites to lending in the wake of Brexit, according to Chirag Shah, CEO of Nucleus Commercial Finance. (Bridging and Commercial, July 2016)
Nucleus Commercial Finance’s CEO explained that P2P lenders are at an advantage as investors are less likely to withdraw their funding, this is all linked to some lenders that have begun to lose their funding lines as a result of financial turmoil caused by the recent EU referendum.
His view is that P2P has an added advantage of having access to non-institutional funds, which are unaffected by Brexit and are the underlying drivers for continuing the low level of returns available from more traditional vehicles, such as savings accounts.
In addition, he stresses that the incentive has stayed the same, as P2P continues to see above-average rates of return on platforms, compared to bank and savings deposits.
Read more industry views here.
P2P is Heating up the World of Fintech
We all know about how fintech is revolutionising finance and disrupting the banking sector and never before has the industry seen such a rapid and strong movement until now.
It’s now easier than ever to digitally connect people to money, and P2P lending takes advantage of that, and is growing by the numbers (as previously mentioned in the first news item).
Nikos Antoniade, CEO of easyMarkets, a company specialized in analyzing financial markets, says that the rise of fintech-related technologies is overwhelming, and that despite of all criticism, P2P lending is here to stay. (Tech.co, July, 2016)
With so many segments of fintech, from payments, insurtech, asset management, etc. P2P is definitely one segment that is heating up, as this chart below from Zopa shows.
Image source : Tech.co
What Are Your Thoughts?
Which of our chosen P2P stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.
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