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The Assetz Capital platform is no longer open to investment from individual investors. No new investments into peer-to-peer loans are possible and, as a result, no new funds should be deposited. The existing loan book relating to the Retail platform is now in run-off and this will, over time, deliver the return of capital to investors. Full information can be found here . Existing Retail lenders can still log in, view information regarding their account and loan holdings and operate their account in accordance with the information regarding the run-off provided on the link above. Please see this important message regarding the currency of the information on the pages on this website.

The Evolution of Peer-to-Peer Lending

The Evolution of Peer-to-Peer Lending

Back in 2010/11, the first generation peer-to-peer platforms were seen by the majority of lenders and borrowers as confusing, difficult to use and requiring time and expertise. Of course they were: “peer-to-peer lending” as a term was relatively unheard of. It was a niche industry, and its target audience was often uninformed and hesitant to invest in something so revolutionary.

According to the most recent survey, 58% of the UK is now aware of crowdfunding, as are 44% of UK SMEs (Nesta Report 2014). The evolution of peer-to-peer platforms both reflects, and has contributed to, these impressive statistics. Here are some examples of how peer-to-peer lending has changed in the last few years:

The Changing Attitudes of Peer-to-Peer Lending

The attitude of platforms has definitely changed since 2010, in particular towards the banking industry. Originally, the term “alternative finance” meant just that – providing an alternative to banks and their services. One platform even launched with the slogan “No thanks banks”.

The attitude towards P2P lenders’ ultimate competitors in financing small businesses has changed now: instead of working against banks, there is a significant effort being made to work with banks. Platforms have begun to partner with banks – us included, see our RBS announcement – who will refer their customers to peer-to-peer lending if they feel they are better placed to provide funding.

It was not only accessibility to finance for borrowers that peer-to-peer platforms loudly challenged, but also the return rates offered to lenders. In the early days, platforms could – and would – be extremely vocal over the generous rates they offered. You won’t find this any more however, mostly due to the recent FCA regulation of the industry in April 2014.

Greater Security For Investors

As investors have grown to understand more about the risk level of each loan, and the market has expanded, the security measures provided have also improved dramatically.

First generation platforms relied on personal guarantees from borrowers, but it wasn’t long before other platforms began to include further protection. Assetz Capital, for example, was the first platform to introduce tangible security on every loan, and our approach has been mirrored by many other platforms – a great thing for the industry.

Improving Accessibility and Customisation in Peer-to-Peer Lending

As the market widens and “peer-to-peer lending” becomes more of a household term, platforms have begun to offer different options in order to be as inclusive as possible. A good example of this is Assetz Capital’s website redesign last month, showcased at the LendIt conference 2014: the platform offers lenders a range of different, simple options to choose from.

Various investment accounts are available, which invest money automatically in loans that match certain criteria. Funds put into the Green Energy Income Account for example, are invested into all the renewable energy projects live on the platform.

Soon, lenders will be able to build their own investment product, setting their own parameters according to their personal preferences, such as location, time period or value. Previously, lenders would need to manually trawl through the loan catalogue and find individual loans that met their criteria themselves. The new accounts make the process much easier and straightforward for those who are new to peer-to-peer lending, or don’t have much spare time.

Diversifying and Doubling In the P2P Industry

While the modern versions of platforms are catering for newcomers to the market, who have little experience or knowledge of its intricacies, there is still a place for the more sophisticated lender. These lenders still have the option to manually invest in and hand pick individual loans, rather than bulk investing into a product.

The peer-to-peer lending industry is set to double by the end of 2015 according to Nesta, and with all the new customers and competition entering the market it will be interesting to see how it continues to evolve in the next few years.

- February 5, 2015

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