Whilst the original direct P2P lending model still remains among a minority of SME lending platforms, Altus Consulting expects P2P loans to become intermediated in the near future; new investors to the sector will be reluctant to spend time researching thousands of loans themselves but will want to take advantages of the better rates that the P2P model enables. Experts at Altus Consulting believe the industry needs to embrace this trend in order to scale growth.
Altus Consulting have also said that the cost of this intermediation is likely to be offset by P2P platforms lowering fees. The costs of supporting an entirely new asset class with different settlement and trading methods are expected to prevent the existing wrap platforms from entering the space using a direct P2P model, and Altus expect the growth to be in investment trusts and funds using P2P loans as an asset class. The reassuring familiarity of the ISA “brand” and a well understood fund structure will undoubtedly encourage growth in the sector.
Bruce Davidson, Consultant at Altus Consulting says:
"Some may mourn the loss of the original directness of P2P and worry it will become just like the banks, but the banks have reason to fear the increasing use of P2P intermediaries. Intermediaries can manage more money than amateur “peers” ever could, providing P2P with scale on the deposits side. On the lending side, nimble, technology-driven underwriting by P2P platforms and intermediaries makes banks’ lending processes look slow and unattractive to borrowers. Banks will need more than an improvement in their PR to face this challenge.
"Inclusion of P2P lending in ISAs will doubtless bring in new investors, allowing the sector to continue its growth and challenge to the banks. However these new investors aren’t going to want to wade through thousands of loans working out which ones to lend on; intermediation, whether in the form of funds or some sort of discretionary lending platform, will be essential to achieving the sector's full potential to challenge the banks."
