Banks now account for a quarter of the lending on UK peer-to-peer websites, in a sign that the UK’s £3.2bn alternative finance market is going mainstream. However Lord Adair Turner, former chairman of the UK’s financial watchdog, thinks that insufficient credit checks by peer-to-peer sites could lead to big losses over the next 10yrs that would “make even the worst bankers look like absolute geniuses”.
“Banks can learn about both cost-effective loan origination and data-driven due diligence from the P2P platforms. I think most of the banks are sniffing around for acquisitions.” Banks are also interested in the systems that peer-to-peer sites use, Mr Westlake said, adding technology was a “big challenge” for the high street banks. Warren Mead from KPMG, a consultancy, said 2016 would be the year when “alternative financial options finally join the ranks of the mainstream.” A number of UK banks, including RBS and Santander UK, have formed partnerships with P2P sites such as Funding Circle in the past couple of years. This enables the banks to refer on some smaller businesses that they are unable to lend to. Metro Bank, a challenger to traditional high street lenders, did a deal with Zopa last year.