Peer-to-peer lenders to double this year as City gives backing

 

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 The Independent he saw 2013 as the best year for the industry – which directly links companies needing cash with investors and ordinary people willing to lend to them – as consumers deserted mainstream banks

“The perception of banks is that they are weak and I can’t see that changing soon,” Mr Andrews said. “Peer-to-peer lending 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.”

Some of the City’s biggest names are confident there is money to be made in peer-to-peer loans, as it has been revealed that Jacob Rothschild, part of the banking dynasty, has taken a stake in Zopa.

This follows the announcement that the firm is to receive £10m in government money to lend out to small and medium-sized businesses, 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,” said Christopher Shaw, founder of Platform Black. “Awareness is so much greater of alternative finance, in future I can see it becoming the first resort rather than the last resort.”

The lenders’ upbeat assessment comes the day after the Bank of England’s Andrew Haldean told The Independent that he could see peer-to-peer and crowdfunding eventually supplanting banks.

Key to the likely growth in peer-to-peer lending, according to Louis Brooke from financial campaign group Move Your Money, is public disenchantment with banking following the summer’s Libor rate-fixing scandal.

“This was a watershed moment, a real catalyst for change,” Mr Brooke said. “Small businesses are already looking at moving their business away from the banks – peer to peer offers a small oasis in a funding desert. As for individuals, they are fed up with the poor savings rates on offer and looking for something better.”

But of concern is the fact that the peer-to-peer industry is unregulated, with firms able to set up and trade with relatively few checks and balances.

Mr Andrews said: “We’ve been calling for regulation and hopefully it will be in place by 2014. This will give the public extra confidence that everything is above board and should reduce the chances of a major scandal from a rogue operator which could damage the reputation of everyone.” It is estimated the industry has already advanced £300m to individuals and small businesses this year.

The banking industry appears to not be concerned at loss of trade, however. Brian Capon from the British Bankers’ Association said: “Banks continue to approve more than 80 per cent of business lending applications. Banking and peer-to-peer lending work differently... it provides a further choice for businesses.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Business Analyst - 12 Month FTC - Entry Level

£23000 - £27000 per annum: Recruitment Genius: A Business Analyst is required ...

Recruitment Genius: Chefs - All Levels

£16000 - £23000 per annum: Recruitment Genius: To succeed, you will need to ha...

Recruitment Genius: Maintenance Engineer

£8 per hour: Recruitment Genius: This is an opportunity to join an award winni...

Recruitment Genius: Telesales Executive & Customer Service - Call Centre Jobs!

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Day In a Page

Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
Srebrenica 20 years after the genocide: Why the survivors need closure

Bosnia's genocide, 20 years on

No-one is admitting where the bodies are buried - literally and metaphorically
How Comic-Con can make or break a movie: From Batman vs Superman to Star Wars: Episode VII

Power of the geek Gods

Each year at Comic-Con in San Diego, Hollywood bosses nervously present blockbusters to the hallowed crowd. It can make or break a movie
What do strawberries and cream have to do with tennis?

Perfect match

What do strawberries and cream have to do with tennis?
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

Team Murray firing on all cylinders for title assault

Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

Nick Bollettieri's Wimbledon Files

Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
Ashes 2015: Angus Fraser's top 10 moments from previous series'

Angus Fraser's top 10 Ashes moments

He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high