Peer to peer lending platform ArchOver recently signed up Wriglesworth Research to dig into consumer awareness and the acceptance of crowdfunding. From November to earlier this month (January) 500 adults were polled as to their opinion regarding new forms of investment. The results, provided by ArchOver, were described as indicating “crowdfunding ignorance, combined with huge public aversion to risk, is holding back investment in SMEs”. ArchOver states that reduced risk improves willingness to invest. ArchOver is a P2P platform that offers “secured and insured” P2P loans.
According to the data shared by ArchOver:
- 59% of consumers do not know what crowdfunding is
- 92% would not crowdfund businesses unless secured on their assets
- 56% would never invest in crowdfunding under any circumstances
- 63% of consumers choose to only invest in savings accounts (e.g. bank, building society, National Savings), avoiding equities, gilts or any other investment opportunities.
- 24% will invest in crowdfunding companies if loans are secured against the company’s assets
- 44% will invest if the loan is both secured as well as additionally covered by insurance.
A key reason for savers’ risk aversion is that savers are investing for their own and their children’s future security. 61% of participants invest for their retirement, their children or future home improvement. This is much higher than the 38% who said their savings were for the luxuries of life, like holidays, cars and boats. Additionally, 63% of participants selected only savings accounts as the place to invest their money, not opting for the additional options of equity shares, bonds or even property – this despite today’s very low interest rates
Executive Chairman of ArchOver Brian Basham said of their information;
“Crowdfunding is growing as a source of funds for small business but public ignorance and risk aversion is holding back much potential investment. However, the willingness to invest increases markedly when crowdfunding is understood and with the added comfort that the loans are both secured and insured.”
Basham believes that education is paramount to advance the fact that P2P assets are a viable alternative to more traditional methods of saving.
“The 2008 recession will soon become a distant memory, but it’s evident that the downturn has made the British public exceedingly risk averse and reluctant to take on higher yielding investments associated with a little more risk. While the majority of people save for their future security and protection, they are looking at very limited options to invest their money. Interest rates on savings accounts are at historic lows, much to the chagrin of informed savers, so it’s remarkable that people aren’t considering wider options.
“P2P lending is gradually becoming a relevant and important asset class. With innovations in FinTech, such as ArchOver’s ‘belt and braces’ secured and insured loans to investors, there is enough room to whet the cautious saver’s appetite for better deals on their investment. The appetite is, of course, obvious by the country’s growing willingness to invest in secure P2P loans. However, there is also a desperate need to educate savers on what crowdfunding has to offer.”
Wriglesworth recently delivered a somewhat related report for real estate platform Landbay.
ArchOver is a subsidiary of the Hampden Group, a provider of insurance and financial support services, and is regulated by the Financial Conduct Authority.
