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LENDING FEATURE FOCUS


Lending in 2017 - Stuck between a disruptor and a regulator


Sometimes you have to feel sorry for traditional players. Fintechs to the left of them, compliance officers to the right. Here they are, stuck in the middle with COBOL


Senior Reporter Alex Hamilton


ending is an industry under continuous disruption. Over the past two years the banking-as-a- service and as-a-platform crowds have managed to find a remarkable niche in matching lenders and borrowers. Through apparently seamless and transparent API models, these new players are opting for artificial intelligence and design-based thinking as the first port of call.


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Traditional vendors have a history of finding it tough to match the agility and granular understanding that the smaller P2P players have. When a bank talks of its credit evaluation platforms, one conjures up the image of an industrial-era boiler room overflowing with steam, complete with a burly moustachioed engineer shouting “she can’t take it, Captain!”. Major banks’ operational models are very often founded on the borrower’s behaviour across a population set. Unsurprisingly, these platforms require a fair amount of human intervention.


Many predicted that 2017 would be the year that a sea-change occurs within the lending industry. This was especially the case when it came to the UK, which has one of the world’s oldest and largest marketplace lending sectors. So, halfway through the year, has anything changed? “As observers, we notice that P2P lending is still growing (in terms of players, amounts and financing term),” says Emmanuel Noblanc, marketing manager at SAB.


4th Way research found lending reached £3.02 billion in 2016 with investors receiving returns of between three 3 per cent and 7 per cent. The most popular form of P2P lending last year was


consumer loans at £1.27 billion, followed by £1 billion for small business finance, £690 million for development and property loans, £40 million for asset-backed products and £10 million on rental property.


Oversaturation


Nicolas Ullmo, product marketing director at Cassiopae, believes that while P2P lending has seen some growth over the year, it hasn’t changed the trajectory of traditional players. The reasons, he adds, “are not fully clear” but that a lot of the P2P loans are of the kind that incumbents would not have funded. As a consequence, he says, P2P is “more an extension of the market” than a true disruptor.


www.ibsintelligence.com © IBS Intelligence 2017


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