The number of consumers turning away from banks and using peer-to-peer lending is set to double this year, according to the industry's biggest player.
Giles Andrews, CEO of Zopa, told i that he saw 2013 as the best year ever for the industry as consumers deserted mainstream banks in their droves. "The perception of banks is that they are weak and I can't see that changing anytime soon. Peer-to-peer lending already accounts for over 1 per cent of the personal loan market and there's no reason why in a few years we can't see that at 10 per cent. We're predicting at least a doubling of the industry in 2013," he said.
Some of the City's biggest names can see money to be made in peer-to-peer as it has been revealed that Jacob Rothschild, part of the banking dynsasty, has taken an undisclosed stake in Zopa the biggest peer-to-peer firm. This follows the announcement that the firm is to receive £10m in government money to lend out to small and medium size business, at present struggling to get loans from the banks.
Meanwhile, new entrant Platform Black, which focuses on small businesses, reckons loans could grow five or six-fold in 2013: "Banks are turning their back on some customers – too onerous, too expensive or the finance just isn't there. Awareness is so much greater of alternative finance, in future can see it becoming the first resort rather than the last resort," said Christopher Shaw, founder of Platform Black
The upbeat assessment comes the day after the Bank of England's Andrew Haldane told i he could see peer-to-peer and crowdfunding lenders supplanting banks, declaring that: "The mono-banking culture is on its way out. Instead, we are seeing a much more diverse eco-system emerging with the growth of new non-bank groups offering peer-to peer lending and crowd-funding."
Key to the likely growth in peer-to-peer, according to Louis Brooke from financial campaign group Move Your Money, is public disenchantment with banking.
Zopa has lent £250m since being founded in 2005, while Funding Circle has lent £66m. It's estimated the industry lends £300m a year.
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