Analysts at Robo.cash Expect a Small Number of New Lending Platforms to Enter Peer to Peer Market: Report

Analysts of the European investment platform Robo.cash say that they’ve predicted that in the next year or two “a small number” of new lending platforms should enter the peer to peer (P2P) market.

According to a blog post published by the Robo.cash team, most of these lenders will most likely be part of financial groups and will provide “more favorable” conditions to compete with older or more established players.

As noted in the update, the Robo.cash research team has analyzed available data and reports that around 80% of the European consumer and business lending market “belongs to 10 P2P-platforms.” The suggests that there’s a relatively high market concentration.

This type of situation is “characterized by the fact that “large players” maintain their positions, and significant structural changes in the market are not possible,” according to Robo.cash’s analysis and observations. The company points out that these platforms that occupy the key positions are “mostly mixed, that is, they work both with business and with consumers.” This means that they create “a competitive advantage by diversifying their supply,” the Robo.cash team explains.

But the peer to peer market is currently undergoing changes “in the ratio of market shares from large players to smaller ones,” Robo.cash reveals while adding that the sphere of P2P investments is becoming “more demanding on the quality of the offered products and therefore, more promising for the development of platforms with smaller shares.”

Robo.cash adds:

“Interestingly, the number of platforms working within financial groups has increased. In the face of growing uncertainty, launching a platform as a part of the group might reduce the risks when entering a new market.”

They also noted:

“If we assess the situation from a far-off perspective, we can see that the concentration of freshly launched platforms reached its peak in 2013-2016. During these years, about 60% of all currently existing platforms entered the European market. From 2017 to the present, the emergence of new platforms has slowed down.”

The analysts at Robo.cash added that future development of the European P2P-lending sector should be driven (for the most part) by existing platforms instead of the new players. Market concentration should weaken gradually as the COVID-19 outbreak made many P2P-platforms with small market shares “competitive enough to be able to change their positions in the market,” the analysts noted.

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