Incoming EU peer-to-peer lending regulations could prompt new entrants to flock to member states where it is easier to obtain a licence, while some existing players could fall by the wayside, experts claim.
Cross-border crowdfunding rules have been agreed by the European Capital Markets Union and will start to be introduced when a two-year transition period begins in November.
The new rules state that all crowdfunding platforms in the EU must be authorised by their member state and can then passport into other jurisdictions within the bloc.
Panellists at the P2P Investing Summit, a virtual event held by AngelNews and Peer2Peer Finance News on Tuesday, said this period could define the size and shape of the European market for P2P lending.
Speaking on the panel, Oliver Gajda, executive director of trade body EuroCrowd, said some regulators will have “tightened the screws” on the sector by the end of the year and others will be more welcoming and attractive to lenders.
“The changes will bring the death of some platforms, this is the intention of some countries,” he said.
“The opportunities are there though and it will create opportunities for everyone who applies for a licence but it then depend on which member state you are in.”
Dr Rotem Shneor, associate professor at the University of Agder and a research affiliate at the Cambridge Centre for Alternative Finance, said he expects there will be mergers to help platforms operate internationally and suggested that there may be more collaboration with financial institutions.
“There are still challenges for platforms operating across the bloc,” he added.
“They need to make cultural adjustments and know how things are presented in different areas.
“The harmonised regulations don’t solve these international marketing challenges.”
He suggested the Baltics could become a more welcoming environment for lenders.
Gadja added that Brexit has created an opportunity for European P2P lenders, as uncertainty over a financial services deal between the UK and EU has given platforms a chance to set up on the continent.
Konstantin Boyko, chief executive of technology company JustCoded, suggested the size of the European market could become as big as the UK market but said this will take time.