Over the next decade the peer-to-peer industry will grow rapidly and reach $1 trillion (£0.59tn) globally, according to a report from US-based venture capital firm Foundation Capital.
This growth will be partly fuelled by consumer dissatisfaction in retail banks that are no longer part of communities, the report states. This frustration with the traditional banking system was further exacerbated by the 2008 financial crisis when consumers and small businesses found it increasingly difficult to obtain loans and lines of credit.
The younger technology savvy generation is leading this change and favouring online platforms. The report cites research that found one-third of the younger generation believe that they won’t need a bank at all and half are counting on tech start-ups to overhaul the way banks work. In addition, three quarters said they would be more excited about a new financial service offering from a tech company than from their own national bank.
Charles Moldrow, general partner at Foundation Capital, argues that peer-to-peer lending can offer a source of finance that is more community orientated and affordable than traditional banks and as a result fill the current gap in the market.
He commented, “Traditional lending works well. For the banks. For centuries, banking has remained fundamentally unchanged.”
Moldrow continued that banks, as intermediaries have always added to the cost of borrowing and that this was accepted because the banks played a part in the community and served the community needs. However, he added, “Today, they do neither. Consolidation has created national mega-banks that are more financial mega stores than they are pillars of the community.”
In the UK, the peer-to-peer market more than doubled in size in 2013, with cumulative lending in the sector reaching £843 million, compared to £381 million in 2012. The Peer-to-Peer Finance Association predicts that in 2014 this rapid rate of growth will continue.
Despite the growth in the market, the majority of investors remain wary of peer-to-peer lending. Research revealed that 84% of consumers would not invest their money through the channel. One of the major concerns is the lack of regulation, although since last month the Financial Conduct Authority has been regulating the industry, partly addressing this issue.
Other worries investors voiced included not knowing enough about the industry, wariness of using a firm they haven’t heard of and not wanting to use an online platform.
Like our Facebook Page
Strange Ways the Sporting World Impacts the Environment
The Future of Cryptocurrency is Eco-Friendlier than the Present
Why Bill Gates Is Wrong on the Climate Impact of Bitcoin
Everything You Need to Know to Create an Eco-Friendly Nursery
4 Environmental Benefits of Using A Buckwheat Pillow
Eco-Friendly Ways to Dispose of The Office Furniture!
7 Huge Advantages of Using Solar Power at Home
5 Important Changes to Become An Eco-Friendly Nicotine User
4 Great Ways to be a Committed Eco-Tourist While Flying
7 Basic Types of Forex Charts Ethical Investors Must Understand
How to Make Your Ecommerce Business More Eco-Friendly?
How Can Social Media Help In Promoting Sustainable Lifestyle?
Luxury Development for The Ultra-Rich Causing Climate Change Conundrum in Barbuda
How Does Bitcoin Mining Work and is it Eco-Friendly?
Is Gen Z Ahead of Millennials in Terms of Eco-Investing?
Four Reasons Why Buying Used Cars Is the Way to Go Green
There is no Planet B: The Growing Importance of ESG
Wonderful Environmental Monitoring Tips to Keep Indoor Air Clean
The Tremendous Benefits of Investing in Energy-Efficient Windows
4 Morning Productivity Tips for Green Entrepreneurs that Are Night Owls
- Features10 months ago
Eco-Friendly Interior Design Is Easier Than You Might Think
- Features7 months ago
Eco-Friendly Hacks To Create A Durable Shop For Your Home
- Features8 months ago
5 Simple Ways To Create A Greener And Healthier Home
- Environment11 months ago
The Benefits Of Sustainable Agriculture For Farmers