FR: Why do you think the peer-to-peer industry is growing at such a rapid rate?
There are a number of complementary factors driving the exponential growth the industry is experiencing. On the lending side, the prolonged low-interest rate environment has encouraged more consumers to look further than their bank to get a better return on their money, and P2P suits those who would like to take a bit more risk but perhaps do not want the volatility of stocks and shares. This is likely to accelerate further once the tax-free allowance for interest is applied from April 2016 and ISA eligibility is confirmed.
Supporting this is an increasing public awareness of the industry and growing trust in the major platforms, largely due to unprecedented levels of transparency and excellent track records of managing credit risk. More recently, the introduction of institutional investors has allowed platforms to scale quickly using a reliable source of funds to complement their consumer funding.
On the other side of the equation, increasing numbers of consumers are taking advantage of the competitive loan rates offered by P2P platforms by cutting out the large financial institution in the middle.
FR: Do you see peer-to-peer lending becoming mainstream in the near future?
I think it’s a matter of when rather than if the industry becomes ‘mainstream’. P2P lending is very much here to stay and the increasing interest from institutions and even banks only serves to validate the benefits of this way of lending and borrowing. Directly connecting peers has transformed a number of important consumer-led industries already and we believe financial services is next.
FR: More than 70% of Lending Works’ new lender funds now come from over 55s – is this a trend you see continuing?
It’s no surprise that a large proportion of our lenders are over 55 as we’ve released a number of important tools to enable flexible lending for those seeking an income in retirement. Our Auto Income tool allows lenders to transfer interest or full repayments directly back to their bank account, offering an annuity-style product with much more flexibility. Our Quick Withdraw facility allows quick access to your funds if needed, which is very important for our lenders.
Lenders are typically a bit older as they’ve had time to build up savings and investments over the years, however we’d like to see more younger lenders getting involved as it’s a great way to grow your money if you’re saving for a house deposit or even for your child’s university fees.
FR: How will regulatory changes continue to influence the market?
The UK government is extremely supportive of our industry and this has been reflected in their positive engagement with platforms via the P2PFA, the industry body representing the sector. We believe the regulatory framework provided by the FCA is fair and adequately protects consumers without impeding the growth of the industry. It’s important at this stage that competition is encouraged, however we do expect increasing levels of regulation as the industry continues to mature which will inevitably add operational costs and increase barriers for new entrants.
FR: Have you got any big plans or exciting news coming up that you can tell us about?
We’re working on a number of important updates for existing customers in terms of new features and improved user experience, in addition to some really innovative new partnerships which will open up new loan distribution channels to allow us to reach more customers.
FR: If you weren’t working in financial services, what would you be doing?
It’s extremely rewarding to turn an idea into a living, breathing company which makes people’s lives a little better. So if it wasn’t Lending Works, I’d like to think I’d be working on another consumer-focused project with similar ambitions.
