Post by jo on Nov 3, 2016 19:36:16 GMT
P2P will destroy the world, and soon
Kadhim Shubber
| Nov 03 19:00 | Comment | Share
Latest (commissioned by traditional financial services FT advertisers) article on P2P.
Note Alphaville is free to register for a restricted number of articles per month. There is a 'share' button on the article, so I did.
'So many questions. Like, why are all those dinosaurs hanging out together as the world ends? Is P2P lending the meteorite or the dinosaurs, or maybe the tree in the middle? Is the implication that in order to wipe out the dinosaur-like banking system we will have to endure a global P2P-created cataclysm that wipes out the majority of life on earth? Perhaps the message here is let no person think of P2P without also thinking of doom, destruction and apocalypse.
Ah, if you look inside, you find an explanation:
Peer to Peer (P2P) lending in the UK is little more than 10 years old, but already the market is crowded with almost 100 firms and business volumes growing at 70% per annum. It is a meteoric rate of expansion and one which puts P2P on a collision course with today’s financial services industry.
An awful, scurrilous pedant would point out that ‘meteoric’ implies an unstoppable descent that ends badly for everyone involved, but thankfully there are no scurrilous pedants around here, so let’s skip forward to the most interesting suggestion in the report:
First, we expect to see new open ended funds enter the market encouraging new pools of capital, especially from the corporate pensions sector. Many EBCs already help their group Defined Benefit (DB) and Defined Contribution (DC) clients to create bespoke portfolios which access infrastructure, corporate debt and more exotic assets. Institutional investors have fewer restrictions than retail investors which should allow them to adopt P2P relatively easily, for example Master Trusts are not restricted by the ‘connected parties’ issue that restricts SIPPs.
Up until now, we’ve mostly heard people in the online lending sector talk about the need for closed, permanent, and sticky sources of capital. That’s why the people at Funding Circle are feeling smug about being the only major platform to have a listed closed-end fund, and why Ratesetter touts its relatively high proportion of retail investors. If you don’t sell deposits, you’re in danger of relying on short-term funding that will have no qualms about cutting you loose, and therefore you need to find something less flighty and/or use your own cash. Lending Club’s experience after its scandal earlier this year shows that dynamic playing out.
A greater reliance on money from open ended funds at risk of redemptions, in that respect, seems like a net negative in terms of stability of funding.
The other “big structural change” Altus Consulting expects is, ironically, the disintermediation of online lenders:
The other major development will be the emergence of aggregators providing a ‘one stop shop’ with access to multiple P2P services. LendingWell and Goji are leading the charge in this area and whilst it is too early to say if either of these will develop to become the Cofunds or indeed Allfunds of the P2P sector, we predict that someone will and the majority of P2P business, both retail and institutional, will be transacted through them by 2020.
Maybe the P2P lenders are the dinosaurs after all?'
Kadhim Shubber
| Nov 03 19:00 | Comment | Share
Latest (commissioned by traditional financial services FT advertisers) article on P2P.
Note Alphaville is free to register for a restricted number of articles per month. There is a 'share' button on the article, so I did.
'So many questions. Like, why are all those dinosaurs hanging out together as the world ends? Is P2P lending the meteorite or the dinosaurs, or maybe the tree in the middle? Is the implication that in order to wipe out the dinosaur-like banking system we will have to endure a global P2P-created cataclysm that wipes out the majority of life on earth? Perhaps the message here is let no person think of P2P without also thinking of doom, destruction and apocalypse.
Ah, if you look inside, you find an explanation:
Peer to Peer (P2P) lending in the UK is little more than 10 years old, but already the market is crowded with almost 100 firms and business volumes growing at 70% per annum. It is a meteoric rate of expansion and one which puts P2P on a collision course with today’s financial services industry.
An awful, scurrilous pedant would point out that ‘meteoric’ implies an unstoppable descent that ends badly for everyone involved, but thankfully there are no scurrilous pedants around here, so let’s skip forward to the most interesting suggestion in the report:
First, we expect to see new open ended funds enter the market encouraging new pools of capital, especially from the corporate pensions sector. Many EBCs already help their group Defined Benefit (DB) and Defined Contribution (DC) clients to create bespoke portfolios which access infrastructure, corporate debt and more exotic assets. Institutional investors have fewer restrictions than retail investors which should allow them to adopt P2P relatively easily, for example Master Trusts are not restricted by the ‘connected parties’ issue that restricts SIPPs.
Up until now, we’ve mostly heard people in the online lending sector talk about the need for closed, permanent, and sticky sources of capital. That’s why the people at Funding Circle are feeling smug about being the only major platform to have a listed closed-end fund, and why Ratesetter touts its relatively high proportion of retail investors. If you don’t sell deposits, you’re in danger of relying on short-term funding that will have no qualms about cutting you loose, and therefore you need to find something less flighty and/or use your own cash. Lending Club’s experience after its scandal earlier this year shows that dynamic playing out.
A greater reliance on money from open ended funds at risk of redemptions, in that respect, seems like a net negative in terms of stability of funding.
The other “big structural change” Altus Consulting expects is, ironically, the disintermediation of online lenders:
The other major development will be the emergence of aggregators providing a ‘one stop shop’ with access to multiple P2P services. LendingWell and Goji are leading the charge in this area and whilst it is too early to say if either of these will develop to become the Cofunds or indeed Allfunds of the P2P sector, we predict that someone will and the majority of P2P business, both retail and institutional, will be transacted through them by 2020.
Maybe the P2P lenders are the dinosaurs after all?'
