May 12 2015
With many consumers and small businesses embracing the concept of borrowing and loaning money to strangers over the past five years, the Peer-to-Peer Lending Platform industry has seen explosive growth. The number of operators has risen from ten in 2010 to 111 in 2015, an annualized increase of 61.8%, benefiting from committed support from investors as well as executives in both the technology and finance sectors.
In order to keep up this momentum going forward, many large industry operators such as Lending Club and Prosper, have sought additional capital over the past twelve months in order to better service growing demand and to also introduce services, especially for small businesses. Lending Club, for instance, undertook an IPO on December 11th, 2014 while Prosper, the industry’s second largest player, raised $165 million in its latest funding round on April 8th, 2015.
At the moment, among the main markets utilizing Peer-to-Peer Lending Platform services that are drawing particular interest are businesses and consumers aged 26 to 60. According to IBISWorld data, 60.0% of total revenue for 2015 is expected to be derived from consumers aged 26 to 60. With the national economy picking up and the housing sector gaining steam, this demographic market is likely to generate an increase in demand for P2P loans especially for home improvement and remodeling projects.
“A promising avenue for growth among P2P lending platforms are business loans that can generate a potentially high return on investment (ROI) for investors while also providing businesses, especially small businesses, an opportunity to get affordable and faster access to capital than from traditional sources like commercial banks,” said IBISWorld analyst, Omar Khedr.
Further potential growth channels include student loans and the securitization of P2P loans. In the five years to 2020, industry revenue is forecasted to grow 19.2% annually to $1.7 billion.