What will P2P look like in 2023?
Summary
There’s no doubt that 2022 was another transformative time for peer-to-peer compliance and lending . The past twelve months saw ebrands, acquisitions, retail exits, and regulation upending the industry and leaving us with a new Big Three. So what fresh developments will the year ahead bring for peer 2 peer compliance?
The roll-out of the European Crowdfunding Service Provider Regulation (ECSPR) has made European P2P lending a much more competitive space. The first few licences were handed out in 2022, with many more expected to follow in 2023. Now any P2P lender licensed to operate in one EU country will be able to operate easily across the other 26 member states. ECSPR-licensed platforms will also be able to offer financing to borrowers in other countries including the UK, potentially putting pressure on UK lenders.
A recent survey by property lender Shojin found that a third of UK retail investors are now more inclined to look beyond traditional investment assets due to concerns about the government’s economic policy. Rising inflation and higher interest rates have made the search for yield much more challenging, and very few investment classes can match the competitive returns, liquidity, and diversification of peer 2 peer compliance.
Another recent study, from European P2P platform Robo.cash, concluded that interest in P2P is rising, and the British P2P lending market ‘remains a powerful financial segment’.
Invest and Fund has predicted that buy-to-let property lending will rise, in line with the trend for smaller property development projects. In a recent blog Invest and Fund wrote ‘Is there a scenario where market entrants and smaller developers are also looking to build portfolios? We believe that may be the case’.
Savills has revealed that more than £5bn was invested in the private build-to-let sector in 2022, with rental income growth as the main driver. This trend is expected to continue in 2023, as the rental market continues to be an attractive prospect for property investors amid declining property sales prices.
Towards the end of 2022, after a few relatively quiet years, fintech M&A activity began to tick up again. Euroclear acquired Goji, Lime Financial acquired LendingRobot, and Tide acquired Funding Options. Fintech M&A activity had previously petered out due to Covid, and many market watchers had speculated that consolidation would spike again once the pandemic was behind us. This appears to be happening.
If economic volatility continues in 2023, larger companies may spot fresh opportunities to break into new markets and acquire new technologies via consolidation. We could even see Peer 2 Peer compliance mergers, as smaller platforms try to scale rapidly to fill gaps left by major players like Zopa, Funding Circle, and Assetz Capital.
Links: https://p2pfinancenews.co.uk/2022/12/28/what-will-p2p-look-like-in-2023/