Zopa is reputed to be the world’s first peerto-peer (P2P) lending platform. It claims to have created the business model for P2P lending. That was in 2005, and it has been so successful since that it is now the single largest non-bank consumer lender in the UK, with more than GBP1.5 billion ($1.97 billion) in outstanding personal loans.

Meanwhile, P2P or marketplace lenders worldwide appear to be struggling in recent years, particularly those in China and the US.

Stocks of listed P2P lenders such as Lending Club, On Deck and Yirendai, have performed poorly, amid concerns about their prospects in a rising interest rate environment and their exposure to riskier credit segments, which are either below or just above subprime. The mis-selling by US-based Lending Club of wrongly risk-classified assets to an institutional investor uncovered in May 2016 did much to harm investor trust and confidence in such online lending platforms.

In China, P2P platforms have come under increased regulation. The lack of supervision in the past had allowed the sector to grow rapidly which resulted in a number of fraud and scam, including Ezubao, reportedly China’s biggest P2P platform but which later turned out to be a Ponzi scheme that cheated close to a million investors of about $8.2 billion over two years. Chinese authorities had from August 2016 introduced tougher rules on the industry.

Zopa on the other hand seems to have managed to buck the trend. CEO, Jaidev Janardana, attributes the success to its ability and effectiveness in managing credit risk and keeping the cost of funding low.

Keeping funding cost low

Janardana believes that Zopa’s robust credit management process enables it lower its funding cost and to price its loans competitively in order to win market share from not just traditional lenders but other P2P players.

“I’m very proud that as a P2P lender I give the lowest return to my inves...

Categories:

Keywords:P2P, Risk, Lending Platforms, Technology

Zopa is reputed to be the world’s first peerto-peer (P2P) lending platform. It claims to have created the business model for P2P lending. That was in 2005, and it has been so successful since that it is now the single largest non-bank consumer lender in the UK, with more than GBP1.5 billion ($1.97 billion) in outstanding personal loans.

Meanwhile, P2P or marketplace lenders worldwide appear to be struggling in recent years, particularly those in China and the US.

Stocks of listed P2P lenders such as Lending Club, On Deck and Yirendai, have performed poorly, amid concerns about their prospects in a rising interest rate environment and their exposure to riskier credit segments, which are either below or just above subprime. The mis-selling by US-based Lending Club of wrongly risk-classified assets to an institutional investor uncovered in May 2016 did much to harm investor trust and confidence in such online lending platforms.

In China, P2P platforms have come under increased regulation. The lack of supervision in the past had allowed the sector to grow rapidly which resulted in a number of fraud and scam, including Ezubao, reportedly China’s biggest P2P platform but which later turned out to be a Ponzi scheme that cheated close to a million investors of about $8.2 billion over two years. Chinese authorities had from August 2016 introduced tougher rules on the industry.

Zopa on the other hand seems to have managed to buck the trend. CEO, Jaidev Janardana, attributes the success to its ability and effectiveness in managing credit risk and keeping the cost of funding low.

Keeping funding cost low

Janardana believes that Zopa’s robust credit management process enables it lower its funding cost and to price its loans competitively in order to win market share from not just traditional lenders but other P2P players.

“I’m very proud that as a P2P lender I give the lowest return to my inves...

Categories:

Keywords:P2P, Risk, Lending Platforms, Technology