Debate: Will P2P Lending Take Over Banking?
Debate: Will P2P Overtake Banking?
Speakers: Matt Hammerstein, Head of Client and Customer Experience, Personal and Corporate Banking, Barclays; Cormac Leech, Director of Alternative Finance, Liberum
Moderator: Peter Renton, Chairman, LendIt
Mr. Hammerstein expressed the view that P2P has a reason to exist. The fact that the alternative finance market has been in existence for a while means there is a need that banks are not able to satisfy. Banks need to learn to move faster, become more efficient and offer better service to their customers, he said. He added that he expects P2P lending companies to continue to grow and emphasised that banks need to work hard to be able to compete.
Mr. Leech pointed out that P2P companies have been able to succeed because they use a different underwriting model, one that relies on technology and big data. Banks won’t be able to compete with them because by their very nature they can’t move as fast as start-ups and need to go through several committees before they can approve a decision, he said.
In 10 years’ time, Mr. Leech said, banks will be in a similar position to book stores and music publishers who lost their business to Amazon and Spotify.
Mr. Hammerstein said it is too early to make such statements until the industry can assess the performance of online lending platforms through the entire credit cycle. The sector will continue to grow, but the rate of growth is uncertain, he said. Furthermore, business models will have to evolve over time and the market will see some consolidation.