UK’s first and largest P2P lending platform – Zopa – informed its retail lenders that it temporarily stops accepting new investments due to low interest in loans.
In an e-mail to its customers, quoted by The Telegraph, the platform said it is monitoring the levels of new money and will be stopping incoming transfers when necessary. “We always aim to lend your money out in a reasonable time. However, with current volumes of new money transfers combined with demands for loans seasonally declining in December, we don’t expect this to be achievable this month,” Zopa said and added that currently the time to lend new money is projected to be lengthy, so it is not accepting new money.
Payments from received from borrowers, however, can be reinvested.
According to Warren Mead, global co-lead for Fintech at consultancy KPMG, quoted by Financial Times one of the reasons for this temporary move is the oversaturation of the market both in terms of competition and in terms of lenders.
“Both retail and institutional investors have been piling money into the platforms — and for most mature platforms there is no shortage of money,” Mead told Financial Times. “The constraint for the industry is getting new loans on the platforms.”
On another hand, the UK alternative finance market has been showing signs of slowing. The growth in 2015 was still strong, despite being half that in previous years. This year, however, a report of financial markets analytics provider AltFi Data revealed that the market is shrinking.
Furthermore, Financial Times notes, there is the controversy that the large institutional lenders and investors like banks, investment trusts and venture funds that are investing through lending and crowdfunfing platforms are “cherry-picking” the most lucrative investment options leaving the crumbs for the small retail investors. A recent survey of the University of Cambridge, for example, found that banks account for around one quarter of all lending on UK’s P2P lending platforms.
Zopa was launched in 2005 and is the largest and oldest UK P2P lending platform. According to some estimates, it has around 20% share of the UK market and since its launch has provided over £1.8 billion in loans. Recently the company applied for a for a banking license with the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA). The plan is to launch Zopa Bank, which will be extending company’s existing suite of investor and borrower products by offering FSCS protected deposit accounts to savers and overdraft alternatives to borrowers.