P2P Money Blog

There are now just under 30 active peer-to-peer companies within the UK.  In five years time, how many of these will actually be around?  What will cause one site to survive when another does not?

If this was a simple question then there companies such as Quakle and YES-secure would still be around.  We can look into individual cases and come up with answers, but those answers wouldn't address the finer points of what makes a successful site.

Publicity

It is fairly obvious that in order to be know, a company will need to publicise itself.  With high profile management or backers this is a lot easier to do than if the management team are less well known.  This can be seen with the press coverage that Money&Co have managed to achieve considering they are yet to go live.

Being listed on sites such as the P2P money website will certainly attract additional publicity.  Appearing on the P2P money comparison tables, which have appeared several times within the national press, will certainly help.

Product

Publicity will certainly give a company a big boost, but if they don't have a good product then customers will go elsewhere.  RateSetter has been very successful because it offered a simple, easy to undertstand product.  Their rates can be lower than some of their competition but lenders have been attracted by their provision fund which offers additional security.

Perception

How a company is perceived will greatly affect how successful it is.  In the peer-to-peer arena this is especially important, as lack of confidence with lenders or borrowers can kill any business, and this is perhaps the attribute that has affected the majority of the peer-to-peer failures.

When a certain peer-to-peer company launched, they were up against Zopa, who were - and still are - hugely successful.  This new company started to do the right things with publicity and they had a decent product.  However when they started commenting on their own product on various forums, including Zopa and LoveMoney - pretending to be lenders - this gave prespective lenders a negative perception of the company.  Were they that desperate to try to get lenders?  This company also ran a forum, and when they started deleting any negative comments and changing posts to put the company in a good light, a lot of lenders - including myself - lost faith and simply stopped lending.  This was the beginning of the end, and this was probably only a few months after a positive launch.

If we look at the leaders within the UK, which are Zopa, Funding Circle and RateSetter, lenders will know they all have a good product, they are good at publicising themselves and all have operated reward schemes, and they are perceived to be trustworthy.  Upcoming peer-to-peer companies should take note!

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