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The future of peer-to-peer lending: highlights from Lendit Europe 2016

Giuseppe Donvito, Partner P101 | October 13th, 2016

With more than 200 speakers, several CEOs of the major Fintech platforms, various banks and asset management companies, as well as with the cooperation of the peer-to-peer Finance Association (P2PFA, the industry self-regulatory body), Lendit Europe is the most authoritative alternative finance meeting in Europe. The event, to which P101 took part along with Borsa del Credito (the first Italian marketplace lending for SMEs), brings together the major lending platforms, investors and providers of lending services, in order to create networking opportunities and develop new businesses.

Lending to small and medium businesses is thriving

LendIt Europe

P2p lending for SMEs is growing and expected to grow steadily, especially in those countries – such as Italy – where the industry is taking its first steps. Indeed, as the Cambridge University research Sustaining Momentum has already highlighted, in 2015 the crowdfunding and peer-to-peer lending market grew by 92% throughout Europe, reaching a total trading volume of 5.4 billion Euros. In particular, lending to SMEs is the second largest branch of the p2p industry (the first being consumer loans). This growth has also been observed by the LARI index (Liberum AltFi Returns Index, which measures the returns of p2p lending): SME lending is having higher returns than other traditional asset classes and higher than expectations.

A big boost for the economy

This is extremely positive data if you think that just in the UK p2p lending to small and medium-sized enterprises has given a boost to the whole of British economy. This is because it helps companies innovate and become more competitive, thus creating a virtuous circle for the economy. In Italy, p2p lending is highly expected to grow: in fact, the amount and number of p2p loans continues to increase. The Italian economy consists of SMEs – according to Confcommercio, they sum up to the 99% of all domestic enterprises – and many of them hardly have any access to bank loans. With p2p lending, this problem would be overcome and resolved. Not surprisingly, Italy reported the largest growth in the European p2p lending market: + 287% in 2015 and + 580% in the last two years.

Winking at banks…

Banks and p2p lenders are not competitors: they are expected to partner and collaborate in the medium term. Actually, p2p lending platforms for small and medium-sized enterprises are the ideal travel companions for banks, since banks can use these platforms to finally invest in SMEs. In fact, in continental Europe institutional investors are taking an interest in alternative finance: 24% of peer-to-peer lending to SMEs has been carried out by pension funds, mutual funds, asset management companies and banks.

… and peeking into the world of SMEs

Finally, at Lendit Europe big data has been discussed extensively. We must not forget the growing importance of Big Data for the Fintech industry and the virtuous consequences of its use. It enables Fintech companies to collect information about the often very nebulous world of SMEs, therefore allowing greater transparency and deeper knowledge.

 

Photo by lendacademy.com