Analysts at Robo.cash have predicted that the European peer-to-peer lending market will have fully recovered by the fourth quarter of next year and volumes could reach €6.2bn (£5.5bn).
By analysing the volume of loans funded through the Robo.cash platform over the past five years, the researchers suggested a scenario where the market will begin recovering gradually from 2021.
They said the second wave of Covid-19 is unlikely to be as damaging for this market, with volumes dropping slightly by four per cent from August to September but resuming growth in October. The researchers forecast the second wave of the pandemic to end by the end of 2020.
The researchers also predicted that the volume of the European P2P market will total €4.3bn this year based on Robo.cash’s data for the first 10 months of 2020.
They said that P2P platforms which navigated through the first wave successfully are better positioned to weather new lockdowns and benefit from subsequent market recovery. Given this, the total European market volume is forecast to reach €6.2bn in 2021, exceeding the pre-crisis levels.
The analysts predicted that P2P lenders will take advantage of the gap banks leave when they tighten their lending criteria.
“We expect two key trends to shape the P2P lending market in the coming year,” the analysts said.
“First, with the fall of the disposable income of European households by 5.9 per cent and unemployment growing to 8.3 per cent it will be crucial for P2P loan originators to ensure the quality of their portfolios.
“Second, with traditional banks tightening their lending requirements, more people will turn to P2P lending.
“Both trends present an opportunity for the players with the best risk management strategies to consolidate their market share and deliver higher risk-adjusted returns to investors in the P2P market.”
This prediction follows research from the platform’s analysts in July which found that 37.7 per cent of investors believed that the European P2P lending market would regain its pre-crisis volumes by the end of 2020.