j
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Penguins are very misunderstood!
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Post by j on Aug 10, 2015 16:29:27 GMT
My view is it will happen when appetite for p2p/crowdfunding starts diminishing (not on horison ATM) &/or economic downturn kicks in. When? That's the question that is hard to answer.
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Post by westonkevRS on Aug 10, 2015 17:22:05 GMT
My view is it will happen when appetite for p2p/crowdfunding starts diminishing (not on horison ATM) &/or economic downturn kicks in. When? That's the question that is hard to answer. 100% agree. And sooner rather than later, as the volumes appear nowhere near profitable sustainable levels required for some platforms. Overheads are high, it isn't just a web site. FCA authorisation does t come cheap or easy. And soon, the hype will die down. RateSetter already took over the GraduRate portfolio when they weren't achieving the volumes they hoped for. Perhaps when other start-ups stop believing their own P2P hype and their money runs out due to lack of sustainable volumes.... The question is, will a larger P2P platform take it over to maintain industry positivism, or let it fail to show that returns come with risk. westonkevRS
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james
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Post by james on Aug 10, 2015 19:08:14 GMT
Given the harm to the reputation of the sector from a failure that costs lenders money the bigger platforms or even quite small ones will probably continue to choose to take over failing platforms.
Illustrating risk is an interesting concept but it'll do the big platform much more harm to let a platform fail with losses than any potential gain from risk. At the moment those not particularly familiar with P2P are typically asserting that it's all high risk, perhaps described as more so than direct holdings of individual shares, and that returns are around 5%. Neither is true for all P2P but the news of a failure with losses would be headline making news that would reinforce the negative opinions. Far more headline-making than the interesting returns are and just about every story about broad P2P investing for the following five plus years could be expected to mention the failure with losses, regardless of which platforms are actually being discussed.
Once P2P is completely mainstream the logic may change significantly. Say at least two years after ISA availability at a minimum. And ideally with a long history of many takeovers after failure so it can be pointed out that the one that wasn't taken over was an exceptional case, not the norm.
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adrianc
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Post by adrianc on Aug 10, 2015 19:42:37 GMT
The question is, will a larger P2P platform take it over to maintain industry positivism, or let it fail to show that returns come with risk. It'd require everybody to agree to let a platform fail, just one to break ranks and take it over.
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Post by davee39 on Aug 10, 2015 20:10:37 GMT
My view is it will happen when appetite for p2p/crowdfunding starts diminishing (not on horison ATM) &/or economic downturn kicks in. When? That's the question that is hard to answer. 100% agree. And sooner rather than later, as the volumes appear nowhere near profitable sustainable levels required for some platforms. Overheads are high, it isn't just a web site. FCA authorisation does t come cheap or easy. And soon, the hype will die down. RateSetter already took over the GraduRate portfolio when they weren't achieving the volumes they hoped for. Perhaps when other start-ups stop believing their own P2P hype and their money runs out due to lack of sustainable volumes.... The question is, will a larger P2P platform take it over to maintain industry positivism, or let it fail to show that returns come with risk. westonkevRSI would be very unhappy if a large platform which holds my investments was weakened by taking over a failed competitor. I have just had a look at one likely candidate which has loaned < £100k over 18 months, I am not sure why it is still around. Many of these are 'me too' start ups which offer nothing fresh to the market, are burning cash and really do not deserve to continue. I would expect to see an orderly wind up of some of these rather than takeover. While a small personal lending or business P2P might be of little value to existing companies I could see the benefit of a takeover by a large financial institution. An innovative bank, building society or insurance company might benefit from the acquisition and re-branding of a minor player
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jonbvn
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Post by jonbvn on Aug 10, 2015 20:45:34 GMT
100% agree. And sooner rather than later, as the volumes appear nowhere near profitable sustainable levels required for some platforms. Overheads are high, it isn't just a web site. FCA authorisation does t come cheap or easy. And soon, the hype will die down. RateSetter already took over the GraduRate portfolio when they weren't achieving the volumes they hoped for. Perhaps when other start-ups stop believing their own P2P hype and their money runs out due to lack of sustainable volumes.... The question is, will a larger P2P platform take it over to maintain industry positivism, or let it fail to show that returns come with risk. westonkevRSI would be very unhappy if a large platform which holds my investments was weakened by taking over a failed competitor. I have just had a look at one likely candidate which has loaned < £100k over 18 months, I am not sure why it is still around. Many of these are 'me too' start ups which offer nothing fresh to the market, are burning cash and really do not deserve to continue. I would expect to see an orderly wind up of some of these rather than takeover. While a small personal lending or business P2P might be of little value to existing companies I could see the benefit of a takeover by a large financial institution. An innovative bank, building society or insurance company might benefit from the acquisition and re-branding of a minor player I think that is very likely IMHO. Someone like H-L may be a likely predator.
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Post by bracknellboy on Aug 10, 2015 21:38:43 GMT
... While a small personal lending or business P2P might be of little value to existing companies I could see the benefit of a takeover by a large financial institution. An innovative bank, building society or insurance company might benefit from the acquisition and re-branding of a minor player I think that is very likely IMHO. Someone like H-L may be a likely predator.Funny that, I'd been thinking along the same lines over the last few days. There is a specific platform I have in mind (not one of the tiddlers which I might expect to fail/go into orderly wind down) which I've been wondering may be focussing its strategy on just that i.e. on building the platform concepts and IT fundamentals to make it attractive precisely for that reason. If so I'm likely to regret my last minute attack of cold feet a few months ago and have made an (non) investment decision based on the wrong reasons.
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Post by loanstar on Aug 10, 2015 22:05:53 GMT
I do not think it is in anyone's interest for a site to fail. This industry is built on trust. Looking back, when smaller building societies (remember those) ran into trouble one of the larger societies would, with perhaps some prompting, take over the smaller society. To the outside world it was described as a merger. In years to come there will be a small number of platforms. Its possible that they will be owned by larger concerns. The trick will be finding away to increase revenues without raising fees to an extent that makes lending unattractive to the small investor. Interest rates are at a historic low at the moment. As they rise, so will fees.
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Post by davee39 on Aug 11, 2015 8:42:47 GMT
I do not think it is in anyone's interest for a site to fail. This industry is built on trust. Looking back, when smaller building societies (remember those) ran into trouble one of the larger societies would, with perhaps some prompting, take over the smaller society. To the outside world it was described as a merger. In years to come there will be a small number of platforms. Its possible that they will be owned by larger concerns. The trick will be finding away to increase revenues without raising fees to an extent that makes lending unattractive to the small investor. Interest rates are at a historic low at the moment. As they rise, so will fees. Many of the smaller Building Societies had a long and proud tradition of serving their local communities, the P2P tail end rabble are completely different. When any finance company with a few hundred thousand and a web site can pop up in the P2P market it has to be a case of customer caution. A better example of failure might be Equitable Life insurance where the industry did not step in to help and losses were huge. As to your comment regarding the industry being built on trust, No it is not. P2P is a commercial financial product and not a mutual, the owners ultimately aim to make a profit.
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Post by Deleted on Aug 11, 2015 8:43:13 GMT
HL are already in the process of setting up their own 'P2P' lending platform (not sure if it will be genuine p2p as I'm not sure if the funds will come from their existing managed fund pot, or from new crowd) for business loans that is due to launch in 12 months or so. Therefore i'd be extremely surprised if they buy a smaller player for the sake of taking the infrastructure when HL's own project is already extremely well funded already from what I hear.
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locutus
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Post by locutus on Aug 11, 2015 8:58:29 GMT
I think P2P will become as big and varied an industry as banking. There will be a handful of dominant players for sure but there will also be lots of other more specialist companies still thriving. SavingStream will never be as a big as RateSetter but they are in completely different markets albeit under the same banner of p2p.
Looking into the far future, there may even come a day when we see fractional reserve p2p. Now that is a scary thought.
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Post by easteregg on Aug 11, 2015 11:20:47 GMT
My view is it will happen when appetite for p2p/crowdfunding starts diminishing (not on horison ATM) &/or economic downturn kicks in. When? That's the question that is hard to answer. 100% agree. And sooner rather than later, as the volumes appear nowhere near profitable sustainable levels required for some platforms. Overheads are high, it isn't just a web site. FCA authorisation does t come cheap or easy. And soon, the hype will die down. RateSetter already took over the GraduRate portfolio when they weren't achieving the volumes they hoped for. Perhaps when other start-ups stop believing their own P2P hype and their money runs out due to lack of sustainable volumes.... The question is, will a larger P2P platform take it over to maintain industry positivism, or let it fail to show that returns come with risk. westonkevRSThere have been around fifteen P2P companies closing over the last 10 years, with only Gradurates being taken over. The barriers to entry in the sector are moderately high as a company would need a website with the necessary back end functionality, plus FCA authorisation, plus the required capital and administration requirements of FCA authorisation. When a company had all of these, then they have to attract customers, and with around 50 other companies operating in this space, they would have to offer something new and compelling, while still having a path to generate a positive return in the future.
I'm sure there will be further consolidation, and while the big three (Zopa, RateSetter and Funding Circle) are big in the P2P sector, they are small in the finance sector and could easily be absorbed by a larger financial institution.
One of the biggest threats to the sector is a medium or large company failing, as this will have a major impact on the remaining companies and could be too big to be absorbed by one of the remaining companies. I have argued for a FSCS type system run by the P2PFA or another body to take such a company and run down its loan book in a controlled manner.
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j
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Penguins are very misunderstood!
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Post by j on Aug 11, 2015 18:24:13 GMT
Is it a plausible option that one of the high street banks/institutions or even a n investment entity might take over one or more of the better established or more innovative p2p platforms? It plays to reason that it might add another string to their bow
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trevor
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Post by trevor on Aug 12, 2015 11:31:42 GMT
I believe that when the P2P ISA is introduced next year this will cause some of the financial investment companies to seriously look at buying one the current more respected businesses such as Z, RS, FC or even SS. To be able to offer a relatively stable interest rate above the current feeble ISA savings rates would be a good way to attract new clients.
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