Industry reacts: P2P would survive a possible recession
The peer-to-peer industry would survive a possible coronavirus-caused recession, platforms have claimed.
Amid fears for the global economy, several P2P platforms have told Peer2Peer Finance News that they are well positioned to survive a downturn.
Mark Williams, chief operating officer and director of credit risk at Nexa Finance, said that although a major economic downturn would affect P2P, the sector would survive.
Read more: SME lenders: Coronavirus could be worse than financial crisis
“A major economic downturn would affect P2P as we’re very much at the forefront of funding the small business community so if we go into recession it would directly affect our borrowers putting schemes on hold,” he said.
“And that would affect the property market as well, there would be a lack of liquidity and people not selling because of uncertainty and there’s no point building new properties if no one will build them.
“But I think P2P would survive and is not going anywhere, this isn’t a sector that just survives in the good times.
“P2P platforms are able to react quickly and adjust to the marketplace and therefore if there was a big downturn recession, we would be reacting accordingly.”
He added that this could involve a series of mergers in the P2P sector, but said that the industry is in unchartered waters.
“Platforms wouldn’t just wait for it to happen but try to be proactive in everything they do,” Williams predicted.
“If we start moving into that arena of a recession, we would develop plans because we are small, young and nimble and don’t have lots of legacy issues to sort out and therefore can put a plan in place quickly.”
Read more: Platforms fear the impact of the coronavirus on the property market
Read more: Analyst warns coronavirus will test P2P lenders
Mike Bristow, co-founder and chief executive of CrowdProperty, said that there is still an undersupply of lending capital to good small- and medium-sized enterprises (SMEs) and property professionals and there will always be a good market for P2P lending supplying that.
“Banks have been known to not be particularly reliable in funding good lending opportunities,” he said.
“I think there will be demand on the borrower side for what P2P lending can offer and then it is about good lending and credit decisions from those P2P lenders.”
Carl Davies, chief operating officer of The House Crowd, said that a recession would be a test for the P2P industry and a chance for platforms to show investors they can deliver superior returns and protect capital in a very volatile market.
“Choosing and underwriting the right loans will sort the adults from the children,” he said.
Meanwhile, Yann Murciano, chief executive of Blend Network, said that in a severe economic downturn P2P platforms could step up to help fund SMEs.
“We think there are some great opportunities for P2P platforms to work closer with traditional banks if these were to slow down their lending activities,” Murciano said.
“From the lenders’ point of view, we have certainly seen investors liquidating their equity positions and looking for yield elsewhere, which is where fixed-return property-secured lending has a strong role to play.
“So, all in all, we see opportunities for P2P platforms.”
