First humans on Mars
27 July 2015 5030 Views
The Treasury has recently proposed that a new type of Isa will be launched that’s dedicated solely to peer-to-peer funding.
This is a big bold step in the direction of turning alternative finance into mainstream finance, with all the advantages of trust and understanding that step will confer.
The Peer 2 Peer Finance Association (currently made up of nine lenders) recently released figures showing that its members lent more than £459 million in Q1 2015, with a cumulative lending value exceeding £2.6 billion.
The data also shows an increase in lending on the previous quarter (Q4 2014) by over 32% and a total lent in 2014 of £1.2 billion.
Given that it is trying to make a shift away from being seen as alternative, the P2P finance industry may not be doing itself too many favours with the language it uses to promote how different it is.
The Peer 2 Peer Finance Association states proudly on its home page: “this revolutionary concept uses the power of the internet…”.
An industry that is trying not to be seen as alternative might be well advised to steer clear of words like “revolutionary”.
I can imagine some borrowers deliberately steering clear of a product that’s revolutionary: a revolutionary car might be expected to break down a lot, a revolutionary spacecraft would probably have to do half a dozen test launches before they put humans in it.
But perhaps that’s the difference between those with an entrepreneurial spirit and the rest of us. They’ll be the first humans on Mars and we won’t be.
On top of the whole revolutionary debate, I’m far from convinced that “the power of the internet” doesn’t bring negative connotations of its own.
The internet is far too big not to encompass negative news stories and headlines. Google finds 92 million results for “internet scandal” and roughly the same number for “online scam”, but only 32 million for “trustworthy internet”!
If P2P funders keep reminding us how banks have lost a lot of trust since 2007, I’d remind them that the worldwide web doesn’t smell of roses all the time either.
You might remember the Alton Towers roller coaster crash at the start of June.
The countless outpourings of social media support and valuable sharing of information lay behind the news and propped it up, but it was one controversial tweet by a Yorkshire legal firm that made headlines of its own, after being accused of using the scandal to drum up business.
If the “alternative” label can be allowed to fade away over time, then it will become easier for new lenders to come along and fill the gaps between lending types.
At the NACFB, we are strongly promoting the idea of filling gaps, so in that sense, we can see the appeal of nobody at all being marked as “revolutionary” or “alternative”. Just “Different”.
Adam Tyler is chief executive officer of the National Association of Commercial Finance Brokers.