The European Online Lending Opportunity
The European Online Lending Opportunity at LendIt USA 2015, with James Meekings, Chief Commercial Officer & Co-Founder of Funding Circle; Peter Behrens, Co-Founder & Chief Commercial Officer of RateSetter; Geoff Miller, CEO of GLI Finance; Jaidev Janardana, COO of Zopa; Partel Tomberg, Founder & CEO of Bondora; Etienne Boillot, CEO & Co-Founder of Eiffel eCapital; and moderator Cormac Leech, Equity Research at Liberum.
Moderator Cormac Leech summed up the goals and rules of engagement for this panel; The questions would probe important issues in European marketplace lending and for that reason would often be thorny. The first question on trajectory went to Partel Tomberg, Bondora. This panelist made bold statements concerning the implicit stability his heavily unsecured lending received by diversifying into multiple countries.
The moderator then pointed questions on provision funds to Peter Behrens. James Meekings pointed out the general trend in marketplace lending of institutional capital entering in to the alternative finance and marketplace lending arena. This ought to be a stabilizing factor or a spur to higher standards. He further pointed out that the first 3 months of 2015 have seen more alt fi issuance than in all of 2013.
The moderator followed up with a comparison between the industry in Europe. Boillot pointed out that the UK is 3 times ahead of the US, but continental Europe is way behind with 50% less penetration. Geoff thinks part of the reason is a lack of regulatory framework. While the vast majority of the funding is retail funding, the UK regulations seemed to be more open to institutional investors.
Several panelists and the moderator pointed out the relatively light regulation on the industry compared to banks, not just in mainland Europe where almost all business lending is from banks, but also in the UK and US. Geoff Miller of GLI Finance stated, “If online lending brought down rates significantly, the risk adjusted returns and regulation would increase in tandem.”
When these panelists from the European industry thought about the industry in America, Etienne Boillot replied, “European investors are very interested in US p2p.” The moderator, Mr. Boillot and Miller agreed risk adjusted returns in Europe seem to be a bit lower in Europe than in the US and that getting institutional investors to invest across borders was key. Although the issues to overcome, even when limited to inter European expansion, was not downplayed.
When the moderator asked what the greatest challenges were for Mr Boillot, his response was that the biggest problem with p2p lending in Europe is that so many Europeans don't know it's going on there. This may indicate that soon regulators, institutional investors and citizens from an universally booming Europe would embrace and flood into marketplace lending.