The ubiquity of the web and its world-wide coverage combined with the maturing of the technology platforms which offer trading services has given birth to many new and different P2P ways to borrow and lend money. The developments have mainly been in the consumer space. However, there have been a few tentative developments in the SME and MNC space, but nothing of major significance. The question, the issue is where and how can the P2P lending/investing platforms and services be effective for corporates?

Consumer products and services

Zopa, the world’s first peer-to-peer lender, founded in 2005, has surpassed the industry milestone of £1billion thanks to 92% growth in demand for peer-to-peer finance over the past year. This growth highlights how peer-to-peer lending is taking off as a mainstream activity as more and more consumers cut out the banks for inflation beating returns and low-cost loans in order to get a better deal.

Zopa currently has over 57,000 active lenders that fully embrace peer-to-peer lending as a reliable and predictable way to grow their money. The average Zopa lender is 47 years old and has lent £5,710. With interest rates at more than double the rate of inflation and five times higher than some rates offered by high street banks and building societies, peer-to-peer lending is becoming a popular alternative for consumers to get a better deal on their money. Zopa expects to deliver over £10m in interest to lenders in 2014 and has returned £37m in interest to its lenders since it launched.

Zopa is calling on thousands of consumers to ditch their under-performing ISAs and bank savings accounts by moving to peer-to-peer lending in order to experience a better way to manage their money and earn higher returns. With no maximum lending limit consumers can lend as much as they wish and can start lending directly to real people with just £10. Zopa also has the longest track record of any peer-to peer lender in the world (9 years) and has the lowest default rate of any UK bank or peer-to-peer lender.

Warnings

The MoneySavingExpert.com web-site says, “Peer-to-peer savings firms like Zopa, Funding Circle and Ratesetter can let you earn a big 6% on your cash. While it can work well if you're able and willing to lock cash away, it's important you understand the risks of this hybrid form of saving and investing before parting with your cash.” 

Their guide then goes into the pros and cons of P2P sites which could equally apply to investing by SMEs or MNCs. 

Corporate P2P sites

There have been several platforms launched for the SME and MNCs market which have mainly focused on specific niches, e.g. bringing private investors and private firms together.

Liquity

The Liquity service was launched in November 2013 to bring the private investors and private firms together for both investing and lending - see.

Other platforms

CTMfile has not heard of any general B2B Peer2Peer platform that duplicates the Zopa functionality. Although platforms such as the Kantox peer-to-peer FX netting solution, see - already match up the needs of MNCs. 

Theoretically investing and lending P2P platforms are similar. However, there are significant differences:

1. although corporates are used to buying each other’s bond, there needs to be an active secondary market to make it easy to trade out of an issuer
2. the legal filings and the distribution as in the broker assisted bond market
3. the credit profiles of the participants may not match.

To build a B2B Peer2Peer investing/lending platform is not going to be easy, but, as one treasury manager of a huge corporate treasury department said, “Build it and we’ll have a look. We need alternatives.”

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CTMfile take: There is real potential for business-to-business P2P lending and investment platforms. However, who is going to build the platforms - banks? third parties? And how are they going to be regulated? There are many problems to overcome, but the opportunity is so vast, that it will happen. It really will be disruptive in so many different ways.