Marketplace lending, also known as peer-to-peer or P2P lending, has grown significantly over the past five years, but remains an alternative finance class in the U.K., accounting for less than 1% of total U.K. lending.
Today’s marketplace lending platforms connect borrowers with lenders, or “investors” for a wealth-management type fee, thus disintermediating the traditional lending process. They provide investors with more attractive returns than term deposits in today’s low-yield environment, typically offering two percentage points above the similar-length term deposits form banks.
L.E.K. believes this market could be significantly bigger – this type of lending is well positioned for growth and is a relevant strategic consideration for a wide range of businesses as part of a customer-centric growth strategy.
In this Executive Insights, London Partners Ashish Khanna and Diogo Silva explain why marketplace lending is both scalable and sustainable, and explore the considerable opportunities available for both current and new participants – even those outside financial services – to be a part of this growth.
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