In January I published my predictions for p2p lending trends in 2009. Now let’s see how good my crystal ball was. The black text is my original prediction, with the review added in green and yellow.
More competition and entering more national markets (probability 100%)
In many markets multiple p2p lending services will compete for the attention of lenders and borrowers. In other markets, where there is no national p2p lending service active yet (e.g. Canada, New Zealand), p2p lending will be introduced by the launch of a service. Possible candidates include Communitylend and Nexx.
It is hard to predict when the dormant US players (e.g. Prosper, Loanio) will overcome the regulatory hurdles and if that step is lasting.
The British market which has (compared to other markets) rather low regulatory barriers so far is dominated by a single player -Â Zopa. I wonder if weâ€™ll see the launch of a competitor there.
Multiple new services launched in 2009, e.g. Aqush in Japan, Sobralaen in Estonia, Uppspretta in Iceland as well as ill-fated Pertuity Direct in the US. Prosper reopened. The mentioned Communitylend and Nexx did not make it so far, though it looks likeÂ Communitylend missed a launch in 2009 only by weeks. No competition in Britain for Zopa yet.
Boom of social lending services/p2p microfinance (probability 100%)
2008 saw the launch of Babyloan, Veecus and Wokai. Kiva funded more the 1 million US$ new loans in a single week in the end of December. The steep growth of Kiva, MyC4 and other services will continue and new p2p microfinance platforms will launch.
Kiva continued it’s enormous growth and popularity. Vittana and United Prosperity launched. For MYC4 it was a hard year with decreasing loan volumes.
First Banks experiment with own p2p lending applications (probability 50%)
While p2p lending volumes are far from being a business threat to banks â€“ banks do watch the developments. Possibly in 2009 a bank will launch its own p2p lending application. The principal aim will not be to generate revenue, but rather to collect experience and to gauge acceptance by the bankâ€™s customers. It will be interesting to see banks testing the water on their path to implement a p2p lending concept that supplements their core business.
Caja Navarra (Spain) launched an p2p lending application. But most other banks still ignore/neglect this field.
Cross-market lending (probability <25%)
Carried over from last year â€“ was not implemented
Aside form the social lending approaches so far all service are open only for lenders and borrowers that live in the same market. If lenders could lend to borrowers in markets with higher key interest rate than the market the lender lives in, the advantages could outweigh the risks. In the European Union due to the Euro zone there would be no currency exchange risk. Again there are steep regulatory hurdles to be taken.
Has not happened.
Variable interest loans (probability ?)
Carried over from last year â€“ was not widely implemented
So far all loans are for fixed terms (prepayment allowed) with fixed interest rates. Variable interest loans could add flexibility. The interest rate could rise or decline following an indicator (e.g. market prime rate). Another possibility would be a mechanism where the variable interest rate would rise or fall as a result of the level of defaults of the credit grade. This could protect lenders, if the actual default ratio is higher then the fore-casted default ratio.
Has not happened.