Review of My P2P Lending Predictions for 2012
In January 2012 I wrote down my predictions for p2p lending developments in 2012. The black text is my original prediction, with the review added in green and yellow.
Deeper integration of mobile (probability <25%)
Can you use a p2p lending service from a Smartphone? Sure. Some even have special apps for that purpose. But that’s not what we are talking about here. We are at the advent of a couple years timespan where several players (compare this infographic) will be fighting over market shares in the developing mobile payment market. If there is a role for p2p lending services, it is yet undiscovered (aside from the use p2p microfinance makes of it in underdeveloped countries). No action so far.
Introduction of a p2p financed ‘credit card’ (probability very low)
Carried over from last year – did not happen
I envision a p2p lending service where the borrower does not get a loan in one full amount initially but can access liquidity on demand (within a predefined credit line). From the funding side this would work somewhat like lenders investing in Ratesetter’s rolling monthly loans. On the borrower side the customer could either request an additional payout via a web-interface or more sophisticated the service could issue a branded credit card / debit card for that purpose, enabling the customer to access cash instantly on an ATM.
This concept has very interesting advantages as it allows the p2p lending service to build a durable relationship to the borrowers. And for the borrowers it offers the potential of lower rates on short term debt than the high rates credit cards typically carry. Has not happened (yet). But Ratesetter took steps that disconnected the lender loan term from borrowers loan terms. A p2p lending service might experiment and stretch that even further to credit cards.
P2P equity services will be spreading and growing fast (probability high – >75%)
2011 was the year of the launch for p2p equity services in several national markets. I expect 2012 to be a year of sharp growth with several new entrants, especially in the UK aided by SEIS tax favours, but also in several countries that do not yet have a running p2p equity service. Regulative and legal barriers for international expansion will likely be lower than in p2p lending, therefore I am confident that one or more services will tackle international (cross-market) services. The question is to what degree will they be successful. 2012 has been a great year for p2p equity /crowdinvesting. It spread to more countries (e.g. Sweden) and competition in some markets is getting crowded. In Germany more than 20 crowdinvesting services have launched or are close to launch. As happens most of the time a few market leaders do over 95% of the volume. In Germany there are 3-4 market leaders. Seedmatch was the most successful one, facilitating 24 fundings with an amount of over 3 million Euro raised. In the US new regulation through the JOBS Act is expected to come into effect in January 2013 allowing the launch of p2p equity services on a large scale there.