No one could have ever predicted how 2020 would pan out. But that’s not going to stop us from making a new raft of predictions for 2021!
Here’s what we think the new year will have in store for the peer-to-peer lending sector…
Platforms will reach profitability
It almost happened this year, but the coronavirus pandemic got in the way. But when next year’s financial results start to trickle in, we expect to see at least a few P2P lenders swing into the black.
New platforms will enter the market
We’re cheating a bit here because Peer2Peer Finance News is already aware of a few new platforms which are set to launch in 2021. But even without this insider knowledge, it just makes sense that the P2P market will welcome new entrants next year.
A looming debt crisis in the UK presents a major opportunity for alternative lenders, while the low interest rate environment will encourage more investors to seek out non-bank returns. Add in a swathe of recent platform closures, and there is clear space in the market for a few newcomers.
The IFISA will return
2020 was a quiet year for the Innovative Finance ISA (IFISA), as several platforms paused lending, delayed their IFISA launches, or shifted their focus to government-backed lending schemes. But as the economy starts to slowly recover from the pandemic, so too will the IFISA market.
Stock market volatility and the threat of negative interest rates have left few options for yield-seeking investors. But with a five-year track record behind it, and inflation-beating returns across the board, IFISA investing should be an obvious choice for investors and advisers alike.
There will be another P2P IPO
The UK P2P market has not seen an IPO since Funding Circle floated on the London Stock Exchange back in 2018. Since then, several IPO rumours have been swiftly debunked, but 2021 could be the year that we see another multi-million pound listing in the UK. We can think of several platforms which would be good candidates for an IPO next year.
There will be more consolidation
Market consolidation – long predicted – finally started to happen in 2020, with several high-profile mergers and acquisitions in the P2P space. We see this trend continuing, as platforms increasingly prioritise secure funding lines and scalability.
More lenders will operate without regulation
Regulation tightened throughout 2020, with a permanent ban on mini-bonds, and new restrictions on retail P2P lenders.
As a result, several platforms have left the market, while others have opted to continue as unregulated entities. The Financial Conduct Authority has signalled its intention tighten its rules even further next year, leading us to suspect that 2021 will see more lenders operating outside of the remit of the regulator.