P2P lenders target a new generation of investors

PEER-TO-PEER lenders are expanding their investor demographic through new advertising campaigns and products that appeal to younger people.

P2P lending has previously been the preserve of the over-50s, predominantly male
and living in the South East, but this is starting to change.

People under the age of 30 now make up 11 per cent of CapitalRise’s investor base, but this rises to 22 per cent of under-35s. At Wellesley, meanwhile, under-34s make up more than 10 per cent of its investors.

Narinder Khattoare, chief executive of Kuflink, said while there is still a sway towards older males this is changing fast and it has seen a huge amount of diversity coming into the market this year.

“As the sector matures and the public hear P2P success stories, we’re pleased to welcome many different types of people who may never have considered investing through traditional means,” he said.

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Platforms are spreading the word through marketing campaigns that target a new generation of investors. Wellesley launched an advertising campaign on the London Underground, which naturally reaches a younger, working audience. Kuflink, meanwhile, sponsors Ebbsfleet United FC, Gravesend Rugby Club and a number of junior sports teams.

“We’re working on some exciting products right now that will be attractive to new investors, show them the possibilities, unravel some of the myths about P2P and share our knowledge,” said Kuflink’s Khattoare. “We believe great returns shouldn’t be reserved for the wealthy and our future plans all centre around making that a reality.”

Uma Rajah, chief executive of CapitalRise, claimed the platform is attracting a diverse range of investors through making its investments accessible from £1,000; outlining the risks and rewards of each investment, thereby making things as clear as possible for first time investors; and diversifying its marketing and advertising partners outside of the more traditional personal finance outlets.

Typically, younger people invest a small amount of money upfront before investing more when they reap the higher returns available.

“We see this on our platform as the average investment from under 30s is under £5,000 whereas for over 30s this jumps up to over £30,000,” said Rajah. “Of course, this is somewhat skewed by some high-net-worth individuals.”

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Karteek Patel, chief executive of Crowdstacker, believes P2P lending and crowdfunding appeal to the next generation because they eschew “some of the less attractive elements of traditional banking, allowing for greater transparency”.

“We would encourage younger people to start an investment portfolio as soon as their finances allow it,” he said. “And the best portfolios are balanced with some riskier and some less risky investments.”

There are still some lenders, however, for whom the traditional older investor is their primary target.
Giles Cross, chief executive of Folk2Folk, said its lenders are typically mature people in their 50s and beyond, which is in part due to its investment entry point of £20,000.

“We are primarily focused on the ‘at retirement’ market and are interested in more experienced investors seeking income rather than growth. We do not currently target younger investors,” he said.

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This story featured in the October issue of Peer2Peer Finance News, now available to read online.