Peer to peer (P2P) lending is witnessing massive growth year on year with an increasing number of investors and lenders seeking out better financial options.
By the end of 2014 there was a peer to peer global value of $9bn and at the end of this year it has already reached $64bn. Over the next 10 years it is supposed to grow over 15 times. With the current growth and popularity, the market has so far been quite unregulated in many countries. It has however started to change. Governments are taking notice and realizing that stricter regulation needs to take place.
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In the UK, P2P lending has had a steady growth of 250% per year over the last two years. As of 2016, individuals will be able to put up to £15,240 into a P2P ISA, ensuring profits are kept tax free for retirement. Peer to peer lending is moving along in terms of protecting investors through risk management, transparency and governance. To date, there are also 16 business lending platforms focusing on small businesses. Local news is that banks are currently in talks to lend through peer to peer platforms following on from the US where there has already been a groundbreaking deal between JP Morgan Chase and OnDeck.
After the recent partnership between JP Morgan Chase and OnDeck, the proof is there that online lending is not only being taken seriously by the banks, but is also here to stay. JP Morgan Chase is the largest bank in the US with $2.6 trillion in assets and a revenue of around $100m. OnDeck have loaned over $3bn to over 45 000 businesses. The partnership allows Chase to facilitate loans through OnDeck by using their underwriting technology allowing for quick approvals and funding of loans. OnDeck will receive an origination and service fee on each loan. This partnership has shown a turnaround in the banking and online lending sector with many new partnerships between banks and online lenders predicted in the near future.
Funding Circle hit its £1bn mark in small business lending in August 2015 and acquired Rocket Internet-backed Zencap in October. This allowed Funding Circle to become the world’s first global marketplace covering the US, UK, Germany, Spain and the Netherlands.
France is the fourth biggest marketplace lender in Europe behind UK, Germany and Sweden. It makes up 21% of the market excluding UK and has grown from only two platforms in 2008 to over 70 in 2015. The government is very supportive of the industry with strict regulations in place.
Although peer to peer lending has really taken off in China, where approximately 3,500 platforms are available, it has been unregulated thus far. Many fly-by-night platforms sprung up whilst some of the more established ones are being investigated for illegal business activities. By December 2014, 92 platforms had failed. Beijing has moved towards regulating peer to peer lending, and has set up a corporate body issuing directives to regulate the platforms. China’s P2P lending platforms have been valued at $15.3bn in 2015.
Globally, peer to peer lending has over 380 platforms in more than 20 countries. CompareLend.com is an international online comparator of peer to peer lending. We help evaluate loans and assist in processing the best online investment opportunities for both investor and lender. Through the careful scrutinizing of loan and investment criteria, we are able to find the best suited partnership with our worldwide partners.