Mike Carter, head of platform lending at the 36H Group, said that peer-to-peer lending platforms are still able to scale despite Zopa announcing its P2P exit.
Zopa revealed on 7 December that it will close its P2P lending operations in January in favour of bank lending and seeking an initial public offering (IPO).
Carter (pictured) said that it was sad to see but made sense that they are going in a different direction with cheaper bank funding.
He added that the platform’s departure does not mean that scalability is not feasible in P2P as many platforms uses diversified sources of funding to grow.
“There’s an emotional twang when that happens (a platform exits P2P),” Carter said.
“One of the features of a P2P platform is that lending margin goes to the lenders and not the platform and Zopa will now buy its loanbook and capture lending margins so they can bring profit into the business very quickly. So you could see that’s an attractive feature ahead of an IPO.
“I do think it is still possible for P2P platforms to scale. Assetz Capital is profitable, CrowdProperty is profitable and Funding Circle is on the cusp of profitability.
“Having a diversified source of funding continues to be a key requirement for building a successful business, not just relying on P2P retail lenders,” he added.
“It’s just good practice and helps platforms to scale more quickly than relying on a single source of funding. I think to get to profitability you need diversified sources.”
Last week Carter said that despite founding members RateSetter and now Zopa leaving the sector, the 36H Group has a future and is in discussions with new members.