It has recently been reported that the UK’s Peer-to-Peer lending market, on a per capita basis, is a huge 72% larger than in the US. Almost $2.3billion in P2P loans was generated in the UK throughout 2014, making it the largest alternative lending market in the world (on a per capita basis). The UK’s P2P lending volume was $35.62 per person, whilst in the US it was just $20.70.
UK market success
The success of Peer-to-Peer lending in UK markets can be primarily attributed to positive regulation and complete transparency, especially at a time when people are dissatisfied with traditional banking methods. A new report from BI Intelligence provides an in-depth analysis on the factors that have helped to nurture this growth, and delves into the next markets that are expected to experience high development too. The report also highlights the risks that could potentially stunt the industry’s growth and provides a companion report to explain how Peer-to-Peer lending works.
Overview and key points
Here is a brief overview of some of the key points to absorb from form the report:
- UK consumer attitudes stimulate a thriving alternative finance market.
- Internet penetration rate is one of the highest in the world.
- Mobile penetration is one percentage point below Germany (EU frontrunner).
- UK consumer e-commerce spend per capita was higher than the US, Germany and France (2012).
- The UK adopts new payment methods much faster than other developed countries.
- Europe is the next big market for Peer-to-Peer lending.
- However, there are serious risks that could disrupt the industry, such as new regulation and rate hikes.
The introduction of ISA
Just like the industry as a whole, Wellesley & Co has experienced rapid growth in the last few years. Such is the significance of the industry’s development, a new ISA named the Innovative Finance ISA which will be launched in April 2016. The IFISA will enable investors to take advantage of tax-free returns through P2P lending platforms and aims to encourage P2P growth and ensure maximum consumer choice.
How the IFISA will affect consumers is still a hot topic. For those who have suffered poor returns on their investments since the economic downturn, it is sure to be a game changer. Consumers could be earning tax-free returns that are double that of traditional ISAs, providing a fairer deal and an alternative choice for those willing to take an increased level of risk.
Peer-to-Peer lending involves lending to individuals or companies and therefore capital is at risk. The risks are outlined here, and should you require any more information on what Wellesley can offer, our Customer Service Team is on hand to help. Call 0800 888 6001 or e-mail us at [email protected].