Marketplace Lenders Struggling to Create Demand in UK

marketplace lenders

The Financial Times has written an interesting piece over the weekend citing lack of demand by consumers for marketplace lending.  We can’t concur that this is the case in the US, and perhaps our friend Ron Suber, President Emeritus of Prosper Loans can comment on the US, but in the UK, marketplace lenders have not yet gotten traction matching investor’s interest in investing.  The specific example cited is an interesting one because it tied online lender Zopa with Uber, and we all know what happened with Uber in London – they’re out.  Interesting read, and our commentary would be that technology takes time for mass adoption.  We believe in the future of online lending – just give it more time to take hold.
(Cindy Taylor/Publisher)

“Zopa needed borrowers and Uber drivers wanted cars. It seemed a straightforward match, bringing together drivers with low credit scores who need car finance and a growing band of institutional investors wanting to expand in the so-called marketplace loans sector.

Zopa, the world’s first peer-to-peer lending company, hoped the partnership whereby drivers for the ride-hailing app were directed to its website for loans would mark its entry into a multibillion-pound market for secured loans in the UK.

But barely six months after the deal was struck it collapsed, with the partnership failing to attract as many drivers as expected. “The pilot was interesting, but demonstrated that the potential opportunity was limited for us, and we had other priorities,” Zopa told FTfm.

As it turns out, the deal might not have been such a good idea. This month Uber was told its licence in London would not be renewed after the city’s transport authority ruled it was not a “fit and proper” operator, a move that could potentially deprive around 40,000 private-hire drivers of a big source of income.

Many of these drivers have “vehicle-related debt”, according to James Farrar, an Uber driver who is a co-claimant in an employment tribunal decision against the group. If the ban is not overturned in the courts, some of this debt could default.

Zopa’s experiment with Uber underlines the enormous difficulty faced by marketplace lenders attempting to find new borrowers.
These borrowers are crucial for the platforms to grow at a time when there is strong interest from institutional investors to provide crowdfunded loans…

“The problem for the industry in the US and UK is not really on the funding side; it’s attracting borrowers.”…

Full Story at Financial Times