P2P lending marketplace revenues set to hit £376m, study shows

By Puja Sharma

Analysis by peer-to-peer real estate investment platform, easyMoney, has shown that the market size of UK peer-to-peer (P2P) lending platforms based on revenue is set to hit a market value of £376m in 2023 after a decade of consistent growth.

P2P lending brings together individuals or businesses who are looking for financial loans with those who want to lend. The borrowers benefit from a more direct and affordable route to finance, while lenders make a good return through interest gained on the money they lend.

In 2013, the market size of P2P lending platform was worth an estimated £20.2m. Since then, the market has grown consistently year after year with the biggest period of annual growth coming in 2016 when the revenue generated by P2P lending platforms climbed by 86.6% to £97.6m in total.

North America and Europe have the largest P2P lending market share, with the Asia-Pacific region noted as the fastest-growing market for P2P lending. While in Asia-Pacific, the P2P lending market is in the early stages of development, but it is the fastest growing market amongst all other regions. China has the largest P2P lending market in the region, and it has grown rapidly in recent years. Other countries in the region with rapidly growing markets include India, Japan and South Korea.

Reliable positive growth has continued every year since and in 2022, the total revenue of UK P2P lender platforms hit £335.8m. It is estimated that, by the end of 2023, this will have grown by a further 12% to hit £376.2m.

Why is P2P lending so popular?

Traditionally, when someone wants to borrow capital, they go to the old-school sources of finance such as banks and building societies. P2P is a more direct route to funding which benefits lenders because they can earn a higher rate of interest.

P2P platforms handle much of the complex admin involved with loans, such as vetting borrowers, overseeing agreements, and chasing repayments. For this, they take a small cut of the interest being charged. .

How to get involved in P2P lending?

To be a P2P lender, you simply need to register with the platform of your choice and pay in money using a debit card or direct bank transfer.

It’s possible to choose how long you want the money to be lent for – usually between one and five years – with many lenders offering fixed term products although this isn’t the case with every lender. With lenders offering flexible products, such as easyMoney, interest is earned monthly and compounds, rather than being paid at the end, increasing an investors return on their investment in the process.

Once your agreed term ends and your loan has been repaid with interest, you are able to take your money back or reinvest the profits to watch your money grow over time.

Jason Ferrando, CEO of easyMoney said, “The market size of P2P lending platforms has shown impressive and consistent growth over the last decade and this has no doubt been driven by democratisation of financial lending, which means it’s no longer just the uber-wealthy who can put their money to work.”

Looking forward, we fully expect the market to continue growing from strength to strength. Borrowing from mainstream lenders is expensive and increasingly difficult, and could get more so over the coming months and years, which means borrowers are looking for alternative, more reliable paths when investing.

At the same time, everyday folk are looking for ways to make their money work harder for them. With the cost of living through the roof, every penny counts, and P2P lending offers a reliable route to ensuring that each penny works as hard as possible. What’s more, we’ve seen the P2P sector evolve in recent years to improve its consumer offering and now, there are many options, such as easyMoney, that aren’t restricted to fixed products, don’t charge fees to the lender, allow them to request to withdraw at anytime and pay interest on a monthly basis, either via withdrawal or to reinvest.”

Pros and cons of P2P lending:

• There is the potential to receive greater returns (interest) than you would through more traditional investment options such as ISAs and shares.
• Despite a lack of institutional protection, such as the financial services compensation scheme which protects customers in the event that their bank, building society or credit union fails, many platforms will secure against losses in some situations. For example taking a first charge over assets with a maximum LTV of 75% 
• As with all investments, you are accepting an element of risk that money may be lost.
• If you need to access your money before the end of your agreed lending term, some lenders may charge a fee, although others, such as easyMoney, won’t.
• If a borrower is able to pay back their loan early, the interest you receive on the money you lend can be lower than you expected.