Breaking the bank: peer-to-peer lending and the takeover of tradition

Peer-to-Peer Lending (P2P) is certainly nothing new. But, in recent years, with consumer needs evolving alongside the development of innovative technology, P2P providers are beginning to pose a very real challenge to the Financial Services industry.

It is no secret that, in recent years, banks have faced a marketing crisis. ‘A recent EY study showed 37% of Britons are losing their trust in banks,’ with impersonalised services and lack of rewards for loyalty being listed as some of their biggest failings. The P2P industry has positioned itself as different, with highly successful results. By using a one-to-one online approach, cutting out jargon and keeping things clear and consistent, P2P lending has offered up a very strong alternative to traditional investment methods; P2P providers are gaining traction among consumers and respect among journalists as this article by Table 19 points out.

The trends within the financial services industry are closely linked with technological innovations and the P2P revolution is riding this wave. With better loan rates, improved customer experience and lower cost services, P2P platforms are turning the industry on its head. Having conducted a comprehensive piece of research, Brilliant Noise recognised the success of a number of financial services platforms, and see P2P platforms as a serious disruptor within the financial services sector.

The Financial Services Forum will be holding an event on 3rd June to discuss Challenges for Savings Providers: P2P and More. This event recognises the growth of P2P in the current economic climate, and will explore how traditional banks should begin responding to such competition. It will also discuss whether savers are fully aware of the risks involved in the P2P model, and how such investment schemes differ from traditional banking services.

Whilst P2P may never replace the traditional banking sector, it is currently providing a very interesting challenge to the old business models. A stronger focus on convenience and accessibility through technology are key guiding points. The P2P industry is delivering to an increasing number of satisfied customers, giving the banking sector a serious run for their money.

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