PEER-TO-PEER lending research firm Orca is planning to launch rating service for P2P platforms, in response to demand from advisers and sophisticated investors.
The Belfast-based company said on Wednesday that the Orca Rating will be designed in partnership with Dublin City University’s Irish Centre for cloud computing and commerce research team and will analyse four factors: performance, liquidity, operator health and security.
“Along with the rapid growth of the P2P market, this initiative was triggered by research conducted by Orca showing a clear demand from the advisory community and sophisticated investors for a rating tool providing better clarity on the opportunities and risks related to P2P investment,” the company said.
According to Orca data, the P2P market has now surpassed £9bn cumulative total lent with 2016 alone seeing a 40 per cent increase in investment in the asset class.
The new rating offering is set to be rolled out in the summer.
Read more: Orca launches P2P due diligence platform
“Despite the recent growth of the P2P market, there is still a fundamental lack of understanding of how P2P lending works, what returns it provides, what risks are associated with it and how to mitigate them,” said Iain Niblock, co-founder and chief executive of Orca.
“It is a complicated market to grasp, and the creation of an overarching rating would simplify the picture for investors. There is so much diversity between P2P providers however, that a single rating to compare and asses all of them is not particularly efficient. That is why we decided to create a four-category rating, to give advisers and investors a comprehensive look at what each provider offers.”
“The financial services community is only starting to understand the role and value of new financing models such as P2P lending in the marketplace,” said Professor Theo Lynn at Dublin City University.
“Our project with Orca Money looks at how reporting by P2P lending platforms can be standardised and their performance assessed. This will play a crucial role in the legitimation of these platforms for all stakeholders as they become more established.”