P2P Money Blog

Following an eventful day 1 of LendIt Europe 2016, the second day stated with opening remarks by Peter Renton, CEO and Co-Founder of LendIt. Peter stated that one of the big standouts of the industry is the passion.  How true.

The state of marketplace lending in the USA was discussed. As mentioned in day 1 marketplace lending in the USA has experiences a few difficulties over the last year.  Goldman Sachs is rumoured to be launching a marketplace lending platform within the next month or so and the lower cost of capital could be advantageous.

Lord Turner made an eagerly awaited appearance at LendIt. He may have expected a sceptical audience after comments were published on the BBC that losses on peer-to-peer would make “bankers look like absolute lending geniuses”.  Lord Turner stated that his comments had been taken out of context at the end of an interview, however he had looked more closely into peer-to-peer lending.  Lord Turner concluded that P2P platforms can perform lending credit assessments in some cases better than, or at least as well as banks. As a former regulator he stated that P2P platforms should “keep it simple and keep it transparent”.  The full presentation is below.

Jaidev Janardana, CEO of Zopa, stated that 2016 had been a turbulent year for the industry, but that transparency has been an important weapon to gain the trust of consumers and regulators. He also stated that consumers are still being underserved by the banks.

The Global Alternative Finance Study by Cambridge/KPMG showed that alternative finance varies significantly by country, with the USA, China and the UK leading the way per capita.

Rhydian Lewis, CEO of RateSetter, gave an interesting presentation on the costs of certainty.  He stated that the costs in maintaining the guarantee on savings is actually very wasteful.  In order to guarantee savings, a certain amount of interest is forgone in order to fund the various mechanisms that will attempt to guarantee the money.  Over a 50 year cycle the amount of interest forgone when compounded would be more than the capital itself.

A discussion on preparing for a downturn highlighted that Zopa’s safeguard fund would not protect lenders during a recession.  Funding Circle’s stress tests have shown that bad debts would be 1.6 times those currently during a recession.

All of the videos are now available on the LendIt Europe website.  I can't wait for LendIt Europe 2017.