The Latest P2P News – 12/10/16

P2P News – All The Latest Updates

 

Hi guys and welcome to our October P2P news blog round-up. As usual, we’ll be taking a look at the latest goings-on in the P2P world and today we start our round-up and look at the proposed regulations that peer-to-peer lenders would like to see in place to giving you some of our very own P2P tips! Missed our previous round-ups? If so, catch up here.

Peer-To-Peer Lenders Want Tougher Regulations

P2P News

Peer-to-peer lenders have said there is an “urgent” need for tougher regulation of their own sector to ensure that consumers understand the risks they are exposed to, thus avoiding a future backlash if investments fail to perform. (FT.com, October 2016)

Peer-to-Peer Finance Association (P2PFA)’s Robert Pettigrew stressed that investors need to realise that peer-to-peer lending products in no shape or form resemble anything equivalent to the guarantees represented by a bank deposit.

The P2PFA mentioned that advertisements from lenders suggesting that peer-to-peer loans were similar to a bank or savings deposit with instant access were “unhelpful”. Eight of the P2PFA members who control a large majority of the UK market are requesting that the regulator sets out stricter guidelines on how loans are marketed to consumers, as well as setting out common standards for declaring bad debts.

Back in February, Lord Adair Turner (who will feature in our third P2P news story) — former chair of the FCA’s predecessor, the Financial Services Authority — told a journalist that, over the next decade, peer-to-peer loans could be the source of losses that “make the worst bankers look like absolute lending geniuses”.

The P2PFA have admitted that they would welcome the development of new rules to “protect not exclude” retail investors, they claim that peer-to-peer lenders have introduced beneficial competition and choice into the investment and borrowing markets respectively.

There has been this fear by some that P2P is confusing in understanding the differences between the concept and also equity crowdfunding.

However, as mentioned in our previous P2P news round-up, the P2PFA stated that there was no evidence to suggest that consumers are currently underestimating the risks associated with peer-to-peer lending as different platforms have adopted a variety of approaches to ensure a high level of consumer understanding. Top industry lenders recommend that investors should require financial advice if they are unsure about the investing process.

Image source : Investopedia

Chinese P2P: Loans More Than Doubled in September

China P2P

Chinese P2P loans more than doubled to a record high at the end of September, despite the on-going challenges that the Chinese authorities face in regulating the exponentially growing sector.According to the official Xinhua news agency, P2P loans surged 153.5 percent to 956 billion yuan ($143 billion).

What’s particularly interesting from the data is that more than a month after China’s banking regulator used aggressive measures to restrain the P2P sector, warning that almost half of the 4,000-odd online lending platforms were seen as problematic.

So how has The Red Dragon been able to sustain P2P growth during problematic times? Many people moving from rural areas have a difficult time getting the loans they need because there is perception that they are not credit-worthy, because of this, there has been a surge in demand for P2P lending products and services. The government has taken steps to clean up the industry after a series of scandals (such as the Ezubao scandal which springs to mind).

 

Lord Turner Changes His Tune on P2P Lending

lord turner p2p

As briefly mentioned in the first story, one of the industry’s most well-known critics of peer-to-peer lending, Lord Adair Turner, has changed of his tune, he is now suggesting that the sector could potentially prevent a future credit crunch.

During a recent speech, Lord Turner was complimentary of the industry, he even suggested that online peer-to-peer lenders could perform credit underwriting.

In addition, he predicts that P2P lending could even act as a “spare tyre to the credit system, making credit crunches less likely.”

In contrast, he still stood by his comments that he made back in February about P2P causing losses, but understood that this loss would only make up a small part of the sector.

Image source : Business Insider

 

P2PFA Releases Major Research on Economics of P2P Lending

p2p research

The P2PFA has released a commissioned study on the economics of the peer to peer lending market in the UK. The independent assessment, provided by the economic consulting firm of Oxera, analysed the risks, costs and benefits of peer-to-peer lending and provided an objective account of how P2P business models work. (Crowdfund Insider, October 2016)

The research primarily focused on the eight-member platforms of the P2PFA – which are known for their high standards of transparency and operation – the P2PFA members comprise over seventy-five per cent of the UK market.

Oxera’s Reinder van Dijk, sees P2P lending as a “real innovation” bringing benefits to both borrowers and investors.

Some key takeaways from the research was that P2P lending has created additional competition and choice in the market for loans and investment, in addition, it provides alternatives for retail investors, opening up access to risk-and-return from an asset class of consumer and business loans with net returns of between 4%-8%.

Moreover, P2P lending does not create systemic risk, and platforms are well-placed to weather a downturn in the credit cycle – borrower defaults would need to increase at least threefold to reduce average interest rates to investors below zero.

It was also revealed that the majority of investors have a good understanding of the associated risks involved.

You can read the full report below.

UK P2PFA 2016.09.30 – Oxera Report – The Economics of P2P Lending by CrowdfundInsider on Scribd

 

Basic P2P Tips

p2p tips

To end this month’s round-up, we thought we would share some basic P2P tips to help you on your way to getting started with peer to peer investments.

Our first P2P tip of the day is to diversify – just like with a stock market portfolio diversifying is key, with P2P lending, you should further diversify by spreading investments across multiple platforms. End of the day, the more you diversify, the less likely you’ll be to lose money on your investment.

Our second tip is to do your research. As Francis Bacon once said knowledge is power. Read the reviews on each platform you consider before getting involved. In addition, ask fellow investors of their experiences. It’s worth noting that not all lending platforms are the same, so make sure you’ve researched how they conduct their business and study their procedures for screening borrowers, as well as learning how they deal with late payments and defaults.

Finally, make sure you re-invest! The last thing you want is to have a static investment, DO take advantage of the compounding yields to be gained by continual reinvestment of returns into new loans.

Looking for more tips? It’s a bit of luck we’re a generous bunch at The House Crowd, view our 7 Top Tips for Investing in P2P Lending here.

 

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.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now for more Info

The Latest P2P News – 16/9/16

P2P News – All The Latest Updates

 

Hi guys and welcome to another P2P news round-up, as usual we will be giving you a snapshot of the latest goings-on in the P2P world. Today we look at an array of news items from there is no evidence of P2P investors underestimating risk to focusing on what the P2P and marketplace lending industry needs to do to go mainstream. Missed our last P2P news round-up? If so, catch up here.

No evidence of P2P Investors Underestimating Risk

P2P Lending

Last month, former FCA chief executive, Tracey McDermott, voiced concerns about the rapid growth of the P2P marketplace that could potentially leave some investors unaware of the risks.

However, the P2PFA’s (Peer-to-Peer Finance Association) director Robert Pettigrew, stressed that this was not the case.

Mr. Pettigrew recently mentioned that although approaches varied depending on the company, the P2PFA was dedicated to ensure investors were aware of all the risks involved.

In addition, he stated : “Different platforms have adopted a variety of approaches to ensure a high level of consumer understanding, but with continued grow and expansion in the sector, the focus on making sure that all investors have an awareness and understanding of the risks of peer-to-peer finance products will continue to be a major priority for P2PFA platforms.” (Bridging & Commercial, September 2016)

Platforms such as LendingCrowd and LandBay recommend that investors should require financial advice if they are unsure about the investing process.

Stock Market VS Peer-to-Peer Lending Investments – Who Wins?

stock market p2p

To buy stock, or not to buy stock that is the question! With recent markets in a volatile state you might want to look for an alternative.

Anyone who is an active stock market investor knows that it takes time to do your research (and a bit of guess work) to figure out where the market(s) are heading.

However, if you’re looking for something that’s less time consuming and slightly more effective – P2P might be for you. There are many platforms out there that are free to pick through the loans that are listed by prospective borrowers and read their stories and explanations of why they need a loan for and what they’ll do with it.

You should review the prospectus of your chosen P2P lending platform before investing as well as spreading the risk of your investment.

With any investment there is always risk involved, however, many view P2P is an alternative, especially with the current volatility of the markets. Anyone looking to diversify their investment and move away from traditional investment options might want to go down the P2P route.

Interested in P2P? If so, why not take a look at our P2P page where you can view investments and order a free information pack.

Brexit Vote Scares Investors Away From Traditional Asset Classes

Brexit P2P

New research suggests that the UK’s Brexit vote is putting investors off traditional asset classes.

Research revealed that 13 per cent of active investors said they have steered clear of currency markets since the EU vote back in late June, in addition, 10 per cent have avoided government bonds and nine per cent have u-turned from investing in equities.

Leicestershire based P2P lender ThinCats told City A.M. that 30 per cent of investors – from a survey of 2,000, including 500 defined as active investors have been put off traditional asset classes.

However, the research showed that assets such as gold has become more attractive, 14 per cent of investors stated that they have turned to the commodity as an alternative. Moreover, 7 per cent, said they view P2P as more attractive after the Brexit vote.

What P2P and Marketplace lending Industry Needs To Do To Go Mainstream

imgp2p

A lack of transparency is one of the key obstacles for p2p and marketplace lending platforms experiencing considerable growth in scale, according to ThinCats’ John Mould, who believes there are several other hurdles the industry needs to overcome to fit into the mainstream investment universe. (Altfi, September 2016)

It’s fair to say that 2016 has been a challenging year for the industry which has seen high profile scandals as well as seeing slow growth.

ThinCats’ CEO told Altfi that he believes the broader industry should deal with several issues centring on greater transparency in returns, what investors are exposed to and securitisation. Mr. Mould says that many platforms are really asset management firms in disguise and should therefore be regulated as such.

Areas where Mould stresses investors and borrowers need greater transparency is in provision funds, collective pools of cash liquidity that act as a type of insurance for investors.

In the Altfi article he also questions the lack of clarity that is linked to retail and institutional investors. He stresses that the issue is that we are not quite sure how they are both treated fairly. We know in a fund that they all come at the same unit price, he mentions, but he questions on who makes the decision process on the loans?

He again questions the lack of clarity in the last paragraph of the article : “If you’re the regulator you’re saying half of them look like fund managers, half of them look like banks but worse and half of them have these provision funds that we don’t know how they work and half of them just seem to be securitising debt. How does that work?”.

 

 

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.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information

The Latest P2P News – 18/8/16

P2P News – All The Latest Updates

 

Hi guys and welcome to our August P2P news blog round-up, as usual we will be giving you five of the latest stories from the P2P world. Today we start our round-up by looking at credit card giants Visa and MasterCard who are diving head first into P2P payments to focusing on UK SMEs who are flocking to P2P. Missed our last P2P News round-up? If so, catch up here.

 

Visa and MasterCard dive head first into P2P

Mastercard Visa P2P

A new partnership with Visa and Mastercard will help grow the reach of the clearXchange network, which allows customers at its member banks to make no-fee peer-to-peer (P2P) transfers.

This is for users who have a US-issued debit card, they will be able to use Visa Direct and Mastercard Send respectively to transfer funds in real time from holders of accounts at clearXchange’s member banks, which include Bank of America, JPMorgan Chase, US Bank, and Wells Fargo.

For major credit card networks this is a huge push to go digital. Both credit card titans have been working on their API platforms as well as rebranding their services. The Visa-Mastercard partnership gives clearXchange another string to its bow as it tries to grab digital P2P market share.

These partnerships should open up the world of P2P payments to an entirely new segment of the U.S. population, it can be inferred that it should in turn spur more payments of this type. A U.S. consumer survey revealed that 59% would use P2P payments due to convenience. In addition, 29% of those surveyed said they would use P2P payments for incentives.

 

Samsung Pay takes on PayPal in P2P payment

Samsung P2P

Sticking with payment giants, Samsung is also said to be planning to add a person-to-person, or P2P, transaction function to the mobile payment solution this year and will compete with PayPal’s P2P service Venmo which has gained popularity in The States and Japan respectively.

PayPal recently said the Venmo service saw the amount of transactions processed through the app increase 140 percent on-year to $4 billion in the second quarter. (The Investor, August 2016)

In Samsung’s native South Korea, Kakao, operator of mobile messenger KakaoTalk are spearheading the mobile P2P payment sector.

Commentators have mentioned that no single company is currently leading the mobile payment solution market, the adoption of a P2P function, if deployed, could give a boost to the mobile phone giant in increasing its presence in the market.

 

P2P in China: Why Firms Need Better Risk Controls

China P2P

This is one P2P issue that has had appeared regularly this year and something we have covered in a previous P2P news blog. P2P in China has become a controversial subject due to fraudulent activity taking place which resulted in a number of arrests.

Since 2015, many P2P platforms including Ezubao, the Dada Group, the Kuailu Group, the Zhongjin Group and others have been charged with illegal fundraising, involving tens of billions of yuan. (Wharton, University of Pennsylvania, August 2016)

However, this has not only happened in China, back in May the U.S. Treasury Department released a report criticising the peer-to-peer (P2P) lending business and recommended it be more tightly regulated (like it is here in the UK).

By the end of May this year, China’s P2P industry reached 2.036 trillion yuan (about $300 billion in transaction volumes).

Kaixindai‘s Zhihan Zhou was interviewed by the University of Pennsylvania and mentioned that the challenge for the industry in China goes from small to big. Many P2P platforms start from the lowest end (individual consumption credit) without gradual evolution. This causes trouble subsequently.

He uses U.S. based company Lending Club as an example – It originally hoped to evaluate personal risk based on data extracted from Facebook, Twitter and other social platforms. That is in America, which has much more sophisticated credit investigation and personal data systems than in China. So you can imagine a large amount of P2P business based on personal credit in China will meet trouble in operation if there is no appropriate risk control system in place. (Wharton, University of Pennsylvania, August 2016)

In addition he was asked about why do many P2P companies in China fail, Zhou said it could be linked to expanding too quickly, e.g. their operational capabilities including data accumulation and risk-control models haven’t caught up. He stresses that the industry requires the practitioner to understand both the internet and finance. People from traditional banks tend to stress more on risk control, but less on USX, especially on Internet-user experience. It’s all about balance.

Interested in both P2P and China? Read the full interview here.

 

How Brexit Has Impacted P2P Lending

Brexit crowdfunding

Managing director and founder of Funding Circle, James Meekings recently spoke to Bloomberg about Brexit and P2P Lending.

Bloomberg’s Adam Satariano asked James an array of questions, firstly he asked – “A key part of your business is having access to the European single market, Brexit has caused uncertainties are you thinking of changing your base of operations?”

James mentions that they have various offices in Europe from Berlin to London and have to abide by regulations in every country that they operate in. He also mentioned that the EU referendum doesn’t make a difference to how they behave in different countries.

Another question that was put forward by Mr. Satariano was about Lending Club and how they’ve been going through tumultuous times with its stock collapsing and questions about its internal controls, he asks James how their situation impacts the industry,investors, banks, and hedge funds that they rely on.

James openly admits that is has been a challenging year – from the worries of the Chinese economy, the Lending Club challenges, plus the EU referendum. He says the Lending Club challenges are isolated and are about control issues, in the UK we have a dedicate framework, and for Funding Circle they are seeing institutional investors being more aware and asking more questions about their operational risk framework, which he says is quite right. They have been reassured by the answers that the company has given them.

Watch the full Bloomberg interview here.

 

UK SMEs Flock to P2P Lending Boosting Jobs and Housebuilding

P2P News

The p2p and marketplace lending industry is driving small business and economic growth, particularly in areas hit hardest since the financial crisis, a new report suggests. (Altfi, August 2016)

A report by the Centre for Business and Economics Research (CEBR) revealed that SMEs are increasingly using p2p and marketplace lending platforms to meet their financial needs.

The findings showed that the North East of England was using this particular form of the alternative finance the most. In England, it was the region that was most affected by the 2008 financial crisis.

The CBRE’s research which was produced with Funding Circle, examined loans made through the platform to small businesses since 2010. The results found that lending by p2p platforms in the UK to small businesses rose by 50 per cent from the beginning of 2015 compared to the beginning of 2016. In addition, it claims Funding Circle’s loans have boosted the UK economy by £2.7bn since 2010, supporting 40,000 new jobs and helping small house builders to add 2,200 new homes.

CBRE and Funding Circle’s research also revealed that 61 per cent of borrowers saw their revenue increase as a result of taking a loan, while nearly half of the SMEs reported a rise in profits.

 

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.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now for more Info

The Latest P2P News – 29/7/16

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

P2P News

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 P2P

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

P2P news

 

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

Brexit

 

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.

FundingKnight‘s managing director Jasper Ehrhardt, also agrees that P2P has been untouched by post-Brexit uncertainty.

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

p2p 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.

 

Zopa P2P Graph

 

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.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information

The Latest P2P News – 7/7/16

P2P News – All The Latest Updates

 

Hi guys and welcome to our first P2P news blog of the month, as usual we will be giving you a snapshot of the latest news from the P2P world. This week we look at an array of topics from looking at the future of P2P to looking at how P2P performed last year. Missed our last P2P news update? If so, catch up here, in addition, take a look at Michele’s latest post on Real Estate P2P and Crowdfunding Leads Alternative Finance Industry.

P2P Has A Bright Future, Insists Dianrong Founder

P2P Future

Founder and chief executive of China’s peer-to-peer lending platform Dianrong.com, Soul Htite feels that more platforms will collapse in the future.

As mentioned previously in a past P2P news blog round-up, the news of Lending Club’s founder Renaud Laplanche, stepping down from his position following an internal probe over allegedly mis-sold loans has made many question the legitimacy of the industry.

Dianrong’s founder mentioned in a recent South China Morning Post article that a system needs to created that nobody will be able to do what Ezubao (a Chinese P2P that defrauded 900,000 investors out of more than 50 billion yuan by offering high interest rates which it was unable to pay) did.

One idea he mentions about is to ask every P2P platform out there to have a custodian bank with which borrowers must have an account.

Moreover, he goes on to say : “The existence of custodian banks also makes sure that capital actually exists and flows to the borrower so that any Ponzi Scheme could be avoided.”

Htite’s company have also been experimenting with blockchain technology, which seems to be a key trend at the moment recently, with quite a few Indian P2P companies also conducting their own research on using the concept.

It seems the future of P2P (not just in China, but on a global level) will be a lot more transparent, as the Diarong example shows by using a custodian bank.

Htite told the South China Morning Post that he believes it is “very normal” to see market bubbles burst and is sure more Chinese P2P platforms will vanish due to failing to raise the money they need to survive.

He stresses that the companies who make industry adjustments will be the ones left standing.

You can read the full article here.

 

Disruptive P2P JustUs Launches

P2P News

A new lending platform has launched with plans to raise to raise £5.35m, including £1m on crowdfunding platform Crowdcube. (MEN, June, 2016).

JustUs aims to become a provider of the broadest range of peer-to-peer consumer loans and secured lending.

Financial services entrepreneur Lee Birkett mentioned in the MEN : “I believe we are completely disrupting the status quo with a range of accessible products for borrowers from a comprehensive range of backgrounds and credit history.”

In addition, he stressed this new P2P disrupter is democratic, by the people, for the people. Savers are uninspired by their humdrum returns. JustUS can give customers access to higher returns by bringing them together with a broad mix of consumer, guarantor and secured loan products.

During Beta testing of the JustUs site, it attracted £130m of borrower applications from a marketing spend of just £150,000.

Read more on the story here.

 

Alternative Finance Continues To Make Progress Despite Slowdown

Alternative finance p2p

Data from Cambridge University has shown that P2P lending for SMEs is helping drive continued growth in the alternative finance industry, despite an overall slowdown in the market.

Their research found that the UK online alternative finance industry grew by 84% to £3.2bn in 2015, from £1.74bn in 2014. This is compared to year-on-year growth between 2013 and 2014 of 161%. (CBR, February 2016)

Researchers at the university estimate that P2P business lending, excluding real estate lending, provided the equivalent of 13.9% of new bank loans to small businesses in the UK last year, this was based on 2014 data from the British Bankers Association.

Interested in the research conducted by Cambridge University? If so read more here.

 

P2P Lending Should Outperform In A Downturn

P2P news

 

According to Polar Capital’s Nick Grind, a significant downturn in the global economy should see P2P/marketplace lending funds outperform regular credit markets. (Altfi, June 2016)

His logic is that investment trusts could be buying back their shares to manage the discounts, plus in a downturn you’re going to see spreads widen on a fixed income portfolio.

The attraction of buying of buying P2P GI or one of the others is that in theory you are getting good risk adjusted returns and there is a lot of granularity.

Read more on Grind’s insights here.

Image source : The Connectivist

 

P2P Throwback : 2015 The Year P2P Lending Went Mainstream

P2P 2015

Since today falls on Throwback Thursday, we thought we would take a look back at P2P in 2015.

2015 was a landmark year for P2P in this country, with lending of £1.26 billion in 2015 accounting for almost half (47%) of all UK P2P lending.

In addition, consumer lending accounted for almost £1.1 billion of P2P lending in 2015, more than two-fifths (40.6%) of the total. In third place was invoice factoring and financing which, at a third of a billion pounds, accounted for an eighth (12.4%) of total lending. (Assetz Capital, January 2016).

The Big three P2P firms continued to dominate, in 2015 Zopa lent £532 million, Funding Circle were not to far behind but ended the year in second place with £531 million.

RateSetter finished the year with £518 million and came third. The likes of Lendinvest and Wellesley & Co. also had a great year, lending £301 million and £152 million respectively.

What Are Your Thoughts?

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The Latest P2P News – 20/6/16

P2P News – All The Latest Updates

 

Hi guys welcome to another edition of our P2P news blog. This week we start our news update by looking at the alternative finance challenges in mainstream lending for the SME market to focusing on the protection that P2P investors need. Missed our very first P2P round-up? If so, click here.

 

One In Six SME Owners Seeking Finance Say They Have Been Turned Down By A Mainstream Lender

SMEs P2P

Leading specialist lender Amicus conducted a study recently and found out that one in six (16%) SME owners seeking finance say they have been turned down by a mainstream lender (such as a high street bank).

Nearly a third of SME owners stated in the research that their inability to secure finance terms with a mainstream lender meant they had lost out on a business deal or investment opportunity. Because of this, SMEs have gained an interest in alternative finance – including forms such as property finance, crowdsourcing, invoice finance, asset finance and P2P lending.

Just over half of the SME owners that took part in the research believe that the huge amount of flexibility that alternative finance offers, is more appealing for SMEs to use, the number is up from 45% in 2015.

The respondents’ views on alternative finance included :- greater ability to lend (46%) was second and longer payment terms (34%) was third. Speed (30%), specialist knowledge of their clients’ industries and challenges (29%) and more compelling payment structures (27%) was ranked fourth, fifth and sixth respectively. (Stats taken from Finextra)

Over half of the respondents said they have already used alternative finance or considered using it.

Image source : Business Europe

Online Lenders Hit Back At The Deloitte Report

P2P Deloitte

Deloitte recently released quite a brutal report on marketplace lending, predicting that it will not pose a threat to the mass market or to banks or that it will be significant.

Those in the industry were quick to hit back at Deloitte’s reports. For example, Assetz Capital CEO Stuart Law shared his views on Business Insider saying that : “When a system fails, like the banking system in 2008, new entrants will emerge to correct the mistakes. We’ve seen a huge growth in the peer-to-peer finance sector because of that failure, and it’s no surprise that questions are being asked over how banks and Peer to Peer will sit together in the future.”

He also went on to say that he sees no reason why banks and peer-to-peer lenders can’t operate side by side as they are not addressing exactly the same markets.Last year his company and RBS announced a partnership whereby if RBS was unable to provide a business with a loan, it would pass the relevant details to Assetz Capital, which will work with the business to develop an appropriate loan package to suit both peer-to-peer investors and the business.

Deloitte’s report also states that P2P is more expensive than banks and whilst that may be true for some platforms, however, the likes of Assetz Capital are very competitive against challenger banks due to having a  low cost of funding and are expected to become more and more so with the introduction of the new Innovative Finance ISA (IFISA).

Read more industry opinions here.

Image source : Linc inc

Indian P2P Platforms Look At Blockchain Technology

India Blockchain

P2P companies in India (Faircent, Micrograam and i-lend) are looking at exploring blockchain technology in order to increase transparency levels.

India’s economictimes.com reported that these start-ups aim to serve as a “ledger system” to automate and record transactions on their platform. However, they have to wait for approval from the Reserve Bank of India for integrating the technology into their systems.

Micrograam’s founder, Rangan Varadan told Econotimes : “This can be done without the use of cryptocurrency. This could be a transformational tool in doing payment transactions.”

The Reserve Bank of India released a consultation paper that mentioned that P2P platforms in the country cannot directly engage in money transactions between the lender and the borrower, once the credit underwriting process has been conducted.

A fintech report by Nasscom and KPMG stated that there is huge scope in understanding the potential of blockchain technology in managing p2p remittances in the Asian country.

New to blockchain technology? If so, watch the video below.

 

China’s P2P Lending Faces A Regulatory Shakeup

China P2P

 

Staying in Asia, we now look at P2P in China (in our first P2P blog we also looked at Chinese P2P – view here), in a recent video spotted on Yahoo Finance, Lufax CEO Gregg Gibb enlightens CNBC viewers in a brief interview that there are thousands of P2P lenders out there in China and that from day one there has been a few practises that haven’t been right and as a result regulator pressure is coming in as there is a large need for borrowing, investing, and what working out is becoming to be clear.

Gibb stressed that a high level of transparency needs to go up and as soon as you create transparency, regulation becomes more easier. The CNBC news interviewer questioned Lufax’s transparency efforts, he told her that they make it very clear to every investor what they are investing in, who the money is going to and also to make it clear about the contractual relationship. Moreover, he mentions about the importance of using tools – e.g. to show how to rate and measure something. To sum it up, he says that it is all about the transparency aspect in P2P.

Although there isn’t a “one size fits all” approach to P2P, in my opinion China can look at The UK when it comes to P2P, over here, P2P companies have to record all transactions (the above example of Indian companies using blockchain would be good for companies around the world), as well as submitting full loan books and the performance of investment returns.

Watch the CNBC interview here.

 

P2P Investors Need More Protection

P2P protection

 

Andrew Tyrie, who chairs the Treasury Select Committee has stressed for the need for more protection for P2P investors.

Mr Tyrie challenged lenders’ systems of checking creditworthiness and asked how peer-to-peer lenders made sure they were getting accurate information about the risks. (Telegraph, June, 2016).

In a letter which he sent to thee Financial Conduct Authority (FCA), he stated : “Whether, and if so to what extent, investors would benefit from stronger consumer protection now needs careful thought. Poorly informed investors may be left with a false sense of security about the balance of risks versus returns.” (Telegraph, June, 2016)

Since April this year, P2P lenders have been allowed to offer their products inside an ISA.

The issue here is that there are a lot of lenders out there that are yet to be fully regulated by the FCA.

Christine Farnish, who chairs the Peer-to-Peer Finance Association, replied back saying that P2P websites are audited frequently, plus all members are required to publish in full the details of their loan books to ensure that investors are able to hold platforms to account on credit assessment.

As mentioned in the above news item and looking at the previous paragraph, there is a high amount of transparency in the P2P industry in the UK, however, it clearly shows that there needs to have more regulations set in stone, especially from the consumer side. Read more on the topic here.

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.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information