25th August 2015 Crowdahouse

Is P2P Lending Really a New Asset Class?

Well, BigFi Needs the Answer

Literally every day there are more and more news stories about P2P lending and the importance of the new fintech platforms in altering the shape of the economy.

Normally, a good article on one of the leading fintech websites will justify a comment or retweet, but every now and then someone writes a piece that stands out from all the noise that inevitably comes with a fast growing emerging market.

Writing in Altfi this week James Levy covers a key element of the new market for alternative finance and asks:

‘Is Marketplace Lending Really a New Asset Class? (And Why This Matters)’

Levy writes:

‘When leading private banks and investment management firms allocate significant portions of their investors’ funds toward the new asset class of marketplace lending, the amount of money flowing towards the platforms will increase by orders of magnitude. Very large flows of savings will earn attractive, stable returns, while ever increasing numbers of businesses and individuals will be able to obtain financing on more competitive terms than those currently available from their banks. This will mark the point where the financial markets return to their basic and crucial function to serve as an intermediary between savers who have accumulated investment capital and people and enterprises who seek funding in exchange for a reasonable rate of interest.’

Is P2P Already an Asset Class? Ask the many thousands of P2P lenders and they will probably say it already is.

There’s a similar ongoing discussion about the supposedly more flexible Family Offices, and how slow they have been to take advantage of the opportunities afforded by the new marketplace in lending. It may be that by the time the institutional finance houses wake up, they’ll find the landscape already so far changed in favour of the individual lender and borrower in the crowd that they are left behind.

Or at the very least, they’ll have to adapt to a new marketplace where crowd power makes the rules of P2P lending.

What’s the Answer?

From a financial industry perspective, Levy’s argument seems spot on and of course, Levy is correct that most people like to judge something new in terms of how much it looks like something old and familiar. And, yes, for the financial services industry to get its head around this does matter.

But outside, in the real world, is ‘marketplace lending really a new asset class?’

Ask the many thousands of P2P lenders and they will probably say it already is.

  • Gary Corben

    CEO, Co-founder

    Gary Corben
  • Gary Corben

    CEO, Co-founder

    Gary Corben

About Crowdahouse®
Crowdahouse is a business-to-business (B2B) property crowdfunding platform lending to business borrowers, always secured against property. Instead of lending to individuals, we’ve reduced the risk by offering you the chance to lend only to property businesses. You join a crowd to lend money in return for interest on your money. Your loan is secured with a first charge over property, just like a bank, and you pay no fees as a lender.

 

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