COVID 19 wasn’t the first challenge alternative lenders have faced in recent months and years, but it is its biggest in a decade.
Image source: Zopa / Jaidev Janardana
UK peer-to-peer lending industry is undergoing one of its biggest tests, says Zopa CEO Jaidev Janardana, who says COVID-19 could mean the closure of a large number of businesses.
Zopa, which pioneered the peer-to-peer lending model in 2005 and has since decided to operate a licensed bank alongside its for-profit P2P lending business, is potentially affected by changes in the real economy.
As a consumer lender, it is a cyclical activity and therefore correlated with the economic fortunes of the economy at large, but also subject to demand for its loans from the investor side by retail investors. and institutional.
With the COVID-19 crisis bubbling through the economy, P2P lenders face the latest in a series of tests that have put disruptors in the spotlight. Janardana, who joined Zopa in 2014 as COO and was promoted a year later to CEO, says this reality means the entire industry will be put to the test.
“I think the peer-to-peer lending business itself is going through a moment of truth, particularly in terms of what’s going to happen to some of our competitors in the space,” he said. AltFi in a recent interview.
“This seems to be one of those inflection points where if the industry – three, four of the big players – can survive and deliver good results for customers, it can be a huge point of proof going forward.” , did he declare.
“On the other hand, if only one or two are able to do it, it could create doubts and customers and it could stunt the growth of the industry for longer,” he added.
Janardana says there has been almost “no disturbance” to Zopa since the start of the crisis.
“We have been largely business as usual in how we have been able to respond to both our borrowers and our investors and continue to lend, continue to attract new borrowers, as well as new investors,” a- he declared.
“We are proud of how we managed to get through this crisis. More precisely, in terms of maintaining the product proposition for the customer and the availability of the service. ”
“And I don’t think there is another platform that has been able to do it. A lot of things that are going to happen in the industry will define how customers view the industry. ”
He says it could go two ways. Either it will show opponents the resilience of the model, or it will be cataclysmic for many companies.
“We are reasonably confident that our assets will perform on a relative basis much better than many other financial assets as well as other platforms. But what happens after COVID?
“How do investors get returns in financial terms and in terms of being able to access their money when they need it and so on.