The history of p2p lending starts in 2005. Zopa is considered to be one of the first fintech companies that have successfully launched a p2p lending platform. Very soon the US platforms LendingClub and Prosper established their loan marketplaces. All three companies are still operating today.
In the decade after the financial crisis 2008, the life of the traditional investor hasn’t been easy. Struck by stock market and macroeconomic turbulence, not even the refuge into savings accounts and state bonds have been an rewarding financial endeavor. It is no secret that interest rates have hit an all time low for United States treasury bonds, while the European Central Bank has lowered rates to zero interest.
As a consequence, investors and borrowers are looking for alternatives; investors are seeking for higher returns, while borrowers are looking for alternative sources of financing beyond the traditional institutions.
Meeting the increasing demand for alternative finance, a new type of borrowing industry has been born: the peer-to-peer investments (abbreviated as “p2p”). Crowdlending platforms found a way to bridge the gap between offer and demand.
In the decade from 2010 many more platforms have been created also in continental Europe, especially in the Baltics. Today, mintos alone is as big as half of the entire market in Europe.
Since the first peer-to-peer lending platforms opened their gates, the crowd lending economy has grown into maturity. With a market size of around 70 billion US dollars in 2019, optimistic forecast predicts the growth of p2p lending until 2027 to 550 billion dollars. The annual growth rate of around 30% is a strong hint of the high investment potential. All along the way, investors have enjoyed great return rates up to 15%. Not even the stock market could catch up with this performance.
The main features of that marketplace are:
Regardless of this impressive facts; while the industry grows, so does its complexity. Knowing about the historical background of the market, especially when contrasting it to other markets, is helpful to understand better p2p lending in its economic context.