Cambridge University’s influential alternative finance research unit has removed Zopa from its peer-to-peer lending data now that it has launched a digital bank.
The second Global Alternative Finance Market Benchmarking Report from the Cambridge Centre for Alternative Finance (CCAF) said it no longer classified Zopa as P2P/marketplace lending, “to reflect changes in market dynamics”.
Total P2P lending volumes fell from $6.6bn (£4.78bn) in 2019 to $4.83bn in 2020, according to the CCAF report.
This was mainly due to a significant drop in P2P consumer lending volumes, falling from $2.16bn to $255m over the period.
In comparison, P2P business lending increased from $2.54bn in 2019 to $3.26bn last year, while the P2P property lending market declined from $1.9bn to $1.31bn.
“The reported decline for the year (in P2P consumer lending) is mainly related to a prominent UK-based platform that has pivoted from a P2P consumer lending model to a digitally native bank,” the CCAF report said.
“Zopa, the first-ever P2P platform, obtained a full banking licence and became a digitally native bank in 2020, hence its volume was no longer classified as P2P/marketplace lending to reflect changes in market dynamics.”
Zopa Group comprises an operational P2P platform, as well as its digital banking arm. However, the P2P platform has temporarily closed to new investors amid the pandemic.
Zopa Group’s latest annual results revealed broadly flat pre-tax losses of £18.1m for 2019, as increased earnings from its P2P lending platform were offset by heavy investment into its new bank.
Zopa’s P2P platform saw its profits tick up to £575,000 for the year ended 31 December 2019, compared to £145,000 the previous year.
Zopa has been contacted for comment.
The CCAF report also revealed that institutional investment in P2P consumer lending increased marginally from 33 per cent in 2019 to 34 per cent last year while P2P business lending saw institutional backing rise from 72 per cent in 2019 to 89 per cent in 2020.
The report put the rise in institutional investment in P2P business lending down to involvement in state-backed lending schemes such as the coronavirus business interruption loan schemes, which cannot be funded by retail lenders.
Funding Circle, Assetz Capital and LendingCrowd all delivered loans to small- and medium-sized enterprises (SMEs) through the coronavirus business interruption loan scheme and Funding Circle has since also been accredited to the recovery loan scheme.