New research into the psyche of peer-to-peer borrowers has yielded some highly unexpected results.
Research firm Cognizant reveals that branch availability is the number one priority for peer-to-peer borrowers when asked what they’d like to see in a platform. The study, which surveyed 701 US peer-to-peer lenders and borrowers in February and March this year, found branch availability to be the single most desired feature for 43% of the borrowers. 89% ranked branch availability among their top three priorities. This will doubtless come as a bit of a surprise to our readers, since no platform in the world currently boasts any kind of physical client meeting place. Indeed, the many peer-to-peer platforms are in fact famed for the leanness of their operations – and the lack of expenditure on physical infrastructure is often cited as one of the primary reasons that they’re able to offer such attractive rates to lenders.
Could this be another avenue of cooperation between peer-to-peer lenders and the traditional banks? A senior client partner at Cognizant described the opportunity at hand:
"This is an opportunity for banks to partner with some of the large peer lending companies to leverage their extensive branch networks to cross-sell services to P2P platform members."
Back in the UK we’ve recently seen Santander partner up with leading small business lender Funding Circle. Shortly after, at the launch of Innovate Finance, Chancellor George Osborne confirmed that all of the British high street banks will be required to refer the SMEs which they reject for lending onto alternative finance providers. There are certainly ways for the peer-to-peer lending sector and the traditional banks to interact – but might bank-style branches be a step too far?
The concern, for some, will be that bank branches represent a movement away from the core values of peer-to-peer lending. Many have already voiced concerns that the vast amount of institutional capital being put to work on the major platforms is cutting out the retail investor, thus distorting the original premise of peer-to-peer and generally rendering the major platforms like Lending Club more and more bank-like. Physical branches might be viewed as an unwelcome next stage in that transformation.
However, another of the core values of many alternative finance platforms is that there's wisdom in the crowd. If an increasing number of peer-to-peer borrowers start calling for the platforms to establish physical outlets - you can bet that the first examples won't be too far away.