Last week, LendIt, the largest peer-to-peer industry meeting in Europe, was held in London. It was the second Lendit Europe conference, and day two was held in partnership with the Peer-to-Peer Finance Association (P2PFA).
There were over 800 attendees (more than double the number last year) from 45 different countries.
LendIt saw lots of exciting news announced by the industry. This included the new P2PFA transparency standards, Funding Circle’s European expansion and the addition of Nigel Morris, co-founder of Capital One, to Zopa’s board as part of an investment by QED investors (PDF).
The hot topics
LendIt is a great forum for discussion, particularly around issues like regulation and industry standards which affect the whole peer-to-peer industry. Here’s what was being said about some of the key themes:
From day one, peer-to-peer has championed transparency, and it came up time and again, not least with the introduction of new P2PFA member standards requiring full and comparable loan book disclosure.
Consumer panels discussed how well peer-to-peer investors understood the risks they were taking, a topic our research suggests Zopa investors are very informed about. Transparency was also an important facet of the industry’s relationship with institutional investors, something that came up in a discussion on securitisation that Zopa’s Sales Director, Jonathan Kramer, took part in.
To paraphrase Zopa’s CEO, Jaidev Janardana, if you’re lending money, you have to be extremely careful to get it back, so unsurprisingly the industry’s understanding and management of risk was heavily discussed. Jaidev described Zopa’s ‘obsession with credit risk’ on day two, where he highlighted how Zopa makes all decisions based on analysis performed by its team of data scientists drawn from organisations such as NASA, CERN and Amazon.
Jaidev also took part in a panel on defining risk on day one, which covered everything from the threat of fraud to the impact of the next recession. The macro-economic environment was also raised during the consumer panel, where Giles Andrews, co-founder and executive chairman, talked about Zopa’s steady performance throughout the 2007/8 recession, when it still generated a positive return for lenders.
A highlight was hearing the FCA’s perspective on peer-to-peer regulation from Christopher Woolard on day two. It’s a positive story, and the industry came in for praise for its collaboration with the regulator (as well as a pretty shaky pun on it being a crowdfunded regulatory regime).
Industry regulation is something that Zopa has actively lobbied for, as Giles Andrews discusses in his recent Bloomberg interview. The FCA’s assessment was that we have developed a proportionate regime, which is less complex than the US, and there’s no overwhelming case for change at the moment.
2016 will see a post-implementation review, particularly in view of the ISA changes.
The peer-to-peer opportunity
Everyone seems positive about the future of peer-to-peer. In her keynote speech on day two, Harriett Baldwin, the City Minister, praised the industry for its impact on consumer choice so far. She highlighted the three things she thinks will continue to create big opportunities for the industry: the continuing tech revolution, increased freedom in how people use their money and government initiatives to inject choice and competition into retail banking.
Liberum’s Cormac Leech also gave us interesting stats from around the world. The biggest peer-to-peer market in the world is China, which is growing at around 300% per year, but he highlighted Europe as the next big growth spot, where peer-to-peer currently has less than 0.1% of the addressable market.
The theme that drew all these topics together was the customer. The new transparency standards are designed to make it easy for potential investors to compare platforms. The discussion around regulation is all about balancing consumer protection and the need to innovate to provide better financial services.
A big development for P2P customers is the introduction of the Innovative Finance ISA next April, and Andrew Lawson, Zopa’s Chief Product Officer, took part on a panel looking at how the industry is preparing for the changing tax treatment of P2P investments.