Major peer-to-peer lender RateSetter is now five years removed from launch.
Launched in October 2010, RateSetter quickly became a force to be reckoned with within the UK peer-to-peer lending space. The platform has lent a cumulative total of £816m to date, according to the Liberum AltFi Volume Index UK, and boasts a 19.09% share of the peer-to-peer lending market over the past three months. The platform has indicated that it expects to lend around £500m this year. The platform is currently ranked third for cumulative lending to date amongst UK P2P platforms.
RateSetter has been trading profitably in recent times, having posted £618,468 of profit before tax in the 2014/15 financial year. Also singling out the platform from its competitors has been its stance on institutional money. Recent AltFi Data analysis showed that the platform had entirely stemmed the flow of institutional funding between June and August.
But RateSetter now has firm plans in place for accelerating growth. RateSetter recently announced that the marketplace would once again play host to institutional money. Where previously P2PGI money had accounted for around 5% of the platform’s lending volume (between May 2014 and May 2015), the contributions of the Marshall Wace backed fund will account for roughly 3% of the capital at work within the marketplace going forwards. Whilst the actual amount of institutional money may rise (potentially to as high as 30% in the medium term), we were told that P2PGI's 3% allocation would not. This shift in stance is just one part of a general “scale up”, which will likely see the company make a loss both in this year and in the next financial year.
Retail investors will continue to reside at the heart of the RateSetter proposition. The platform hosts a community of over 26,000 active investors, and the number is reportedly growing rapidly. All of these individual investors are guarded by RateSetter’s signature “Provision Fund” – which has ensured that not a single loss has been sustained by any of these individual investors to date.
“Over the last five years RateSetter has led the way in showing that finance can work in the best interests of consumers. We have reduced the cost of borrowing and increased returns for investors, empowering people to decide the fair level of interest rates. I am proud to say that thanks to our prudent underwriting and our Provision Fund model, not one individual RateSetter investor has lost a penny since our launch.”
“I’m very excited about the next five years. Our vision is that RateSetter will transform the UK’s finance landscape, with the RateSetters’ Rate becoming a benchmark interest rate recognised as the going rate for money.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.