The P2P Space Through the Public Eye

RateSetter has been probing the minds of MoneyWeek’s readership in an effort to gauge attitudes towards the peer-to-peer phenomenon.

The ascendant consumer facing platform chose MoneyWeek for the smart, savvy savers that comprise the bulk of its audience. Avid MoneyWeek readers will likely also have come across AltFi Director David Stevenson’s now monthly column on alternative finance. The survey received over 400 respondents, unearthing some telling results:

1. “Will P2P become a credible challenger to high street banks?” 82% replied yes.
2. “Do you think P2P can offer more value than banks?” 93% said yes.
3. “Consumer P2P and equity crowdfunding are the same?” 92% answered no.
4. “What’s more risky: Business or Consumer P2P lending?” Respondents were split evenly on this issue.
5. “Would an increase in the base rate reduce the attractiveness of P2P?” 57% said no.
6. “Did you know that P2P will be included within ISAs?” 56% said no.

In regard to questions 1 and 2, MoneyWeek’s readership is unquestionably more clued in on peer-to-peer related matters than your average Joe, but it’s nonetheless encouraging to see so strong a vote of confidence for the sector.

Similarly, though it is perhaps to be expected, it’s good to see that the majority of respondents were able to distinguish between the disparate worlds of equity and debt-based funding. This is no trivial distinction – and any lingering confusion on the issue has certainly been compounded by the maddening inconsistencies in the terms of reference used by everyone from commentators to the platforms themselves.

Intriguing to see a 50/50 split in terms of picking the riskier space between consumer lending and business lending. Given the variety of investor protection methods out there, it may have been more interesting to have tested readers’ opinions of those various risk management tools: provision funds, secured lending, skin-in-the-game lending, insurance, etc.

The fact that the slight majority of respondents claimed they would be unaffected by an increase in the base rate is a promising sign for the industry. P2P returns will always top the returns on offer with traditional deposit accounts – even if the base rate goes up. And of course there are other benefits beyond the return: the ethical element, the ease and speed of the process, autonomy over your lending decisions, and so on.

The survey revealed over half of respondents to be unaware of the impending ISA inclusion for peer-to-peer investments – which is understandable given that the P2P ISA probably won’t come to fruition until early in 2015. When it does arrive, however, the P2P ISA is expected to jolt the sector into life once and for all as a mainstream financial product.

You can view the full survey here.