The words we use to talk about finance matter a great deal. In “How to Speak Money”, John Lanchester argues that the language used by those in the finance industry is excessively complex – no surprises there – and that this complexity means that ordinary people are excluded from debates around important issues, almost entirely because of jargon.
This jargon is pervasive, and even the transparency which alternative finance providers pride themselves on isn’t quite enough to shake the spell.
Some financial words are so wonderfully evocative that they aid our understanding. “Bubble” for example, is such an effective metaphor for something that will increase in value before collapsing that you could expect a child to understand it. Meanwhile, the term “quantitative easing” is so obtuse that many people prefer to talk about “printing money”.
Words which are effective (they describe something in a way that is accurate and understandable) tend to do well, and hence it’s no surprise that you might well overhear references to a “tech bubble” in a coffee shop whereas you’re unlikely to hear about “quantitative easing” outside of the financial media.
Which is why it’s odd that, of all the words that we use to describe what we do, “peer-to-peer lending” is the phrase that’s stuck.
When we launched in 2013, “peer-to-peer lending” was a pretty well-established term, and one which enough people understood for it to make sense for us to use it. It’s hard enough launching a new business without telling everyone that they’re using the wrong word.
As with anything, the etymology of a word often sheds important clues. Peer-to-peer was– and still is, to be fair – a bit of a buzz-word. What so-called P2P lenders do is to facilitate a form of lending which is more direct than bank lending.
“Direct lending” would have been a good term for what we do, or more accurately, “lending”. That’s all you’re doing on platforms such as Assetz Capital – the difference is that you’re doing it with more control and transparency.
“Peer-to-peer” doesn’t really mean very much, of course. I could argue that this is a peer-to-peer exchange via an electronic medium (you – one peer – are reading a message written by me – another peer – online). We don’t tend to go in for that sort of language in Stockport though, so it’s far more accurate to say that you’re reading something that I’ve written.
Peer-to-peer in itself conjures up images of Napster and a brave new world of online sharing and an open internet, so it’s no surprise that the early pioneers of P2P lending would have embraced that kind of language.
“Peer-to-peer” is slightly misleading though. What we’re doing – allowing people to lend money directly to others – is as old as the hills. All that’s really changed is the technology that makes this effective. Our lenders aren’t just people in their 20s jumping on the next big thing; we have people of all ages, all the way up to 93, lending money via our platform.
Language evolves though. Right now, peer-to-peer lending, and several other kinds of funding, are grouped together as “alternative finance”. However, these industries are thriving and showing that they have what it takes to compete as equals with more established forms of finance.
That’s why we won’t be too upset in a few years’ time, when we consign “alternative lending” to the history books, and see peer-to-peer lending for what it is – plain, old-fashioned lending.