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Much more than a temporary phenomenon

This week, the newspapers have covered a Deloitte report that discusses whether marketplace lending is a temporary phenomenon.

A long-term threat to the banks?

The report highlighted a number of areas where peer-to-peer lenders (or marketplace lenders as it refers to us) have outclassed existing banks, for example in the user experience they provide customers. However, it concluded that peer-to-peer lending was unlikely to pose a threat to banks in the long-term.

Perhaps unsurprisingly, we disagree with this conclusion. Peer-to-peer lending is growing rapidly (in 2015 alone it doubled in size) and with fully regulated status and Innovative Finance ISAs just around the corner, we expect it to continue to do so until it has a significant share of the UK loans market.

‘Consumers will vote with their feet, or more likely their phones’

Commenting on the report in an article in the FT, Giles Andrews, Zopa’ executive chairman and part of the team that co-founded Zopa in 2004, said:

“Having invented peer-to-peer lending 11 years ago, I have a rather different view of the future of financial services. I think we will increasingly see consumers voting with their feet, or more likely their phones, and seeking out best in class products and services based on where they can get the best value and also the best experience. They will look for products that are easy to understand and great technology solutions that make their life easier – I don’t think banks can begin to keep pace with that.

“So I see specialist companies who are very focused on a certain product set and able to deliver these best experiences, be that peer-to-peer in lending or other companies doing better money transfers or mortgages, taking share. Banks will partner with these companies to ensure their customers also get the best, and most financial transactions will go through these specialists, with the majority of lending happening peer-to-peer.”