Zopa and P2P lending in the UK - World Bankpubdocs.worldbank.org/en/707841560127609876/FinSAC...P2P...
Transcript of Zopa and P2P lending in the UK - World Bankpubdocs.worldbank.org/en/707841560127609876/FinSAC...P2P...
Zopa and P2P lending in the UK
Christine Farnish CBEChair Zopa Ltd
P2P Model in the UK
Strictly Private & Confidential 3
14 years ago, Zopa invented a new model of lending
P2P platform (36H permissions)
Funding
Receive principal + interestInvestors Borrowers
Funding less loan origination fee
Usually retail consumers and
institutional money
Retail consumers or established
SMEs
Platform facilitates lending and undertakes
risk management
direct legal contract
Pay back principal+ interest
+ servicing fee
Note: Investors usually pay a fee when selling their investments.
Strictly Private & Confidential 4
P2P lending is a more direct alternative to traditional lending models
Source: Oxera 2016, The economics of peer-to-peer lending.
Strictly Private & Confidential 5
The UK market has provided the conditions to support the growth of P2P lending
Digitally savvy consumer base with high adoption of digital for retail propositions
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2
3
An advanced and robust regulatory regime recognising the need for increased competition and innovation outside of traditional markets
Strong financial services skillset and network of supporting service businesses (e.g. credit bureaus)
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The P2P market is still small, but provides alternative risk-return products to consumersUK savings & investment market, 2017Bubble size represents size of market, in £bn
Zero / low risk & return High risk / volatility & return
Co bonds£25bn5-6%return
Savings£1,450bn
0-2% return
NS&I£150bn
0-1% return
P2P£5bn4-7%
returns
Mutual funds£750bn
5-10% return
Equities£800bn
c.10-15% return over mid-term
Short term access Long term horizons
Source: GlobalData 2018; Cambridge Alternative Finance Report
Strictly Private & Confidential 7
Over the last decade UK consumers have earnt below inflation returns in savings accounts
Returns by Asset Class(% return)
Asset class Annualised Return (%)
Cash savings 1.9%Inflation 2.7%
-25-20-15-10-505
10152025
2005 2007 2009 2011 2013 2015 2017
Cash* Inflation
*Deposit Accounts (Bank of England)
Strictly Private & Confidential 8
The FTSE index has been highly volatile
Asset class Annualised Return (%)
Cash savings 1.9%Inflation 2.7%FTSE 100 9.0%
-25-20-15-10-505
10152025
2005 2007 2009 2011 2013 2015 2017
FTSE All-Share total returns Cash Inflation
Returns by Asset Class(% return)
Strictly Private & Confidential 9
Managed, diversified P2P platforms like Zopa can offer a less volatile, inflation beating return
Asset class Annualised Return (%)
Cash savings 1.9%Inflation 2.7%FTSE 100 9.0%Zopa P2P 5.2%
-25-20-15-10-505
10152025
2005 2007 2009 2011 2013 2015 2017
FTSE All-Share total returns Cash Inflation Zopa
Returns by Asset Class(% return)
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Whilst ensuring customer satisfaction on both sides of the platform
Strictly Private & Confidential
Incumbents have poor NPS1
1 – NPSBenchmarks, Barclays Strategic Report 20172 – Average NPS scores of selected customer focused tech companies3 – YouGov Poll 2018, Mintel Loyalty in Financial Services Report 2017
(24)
(1)
920
27
7176
UK
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9.7 out of 10
Best Personal Loan Provider (2019)
Best Customer Service (2018)
Strictly Private & Confidential 11
This has translated into an impressive growth story for Zopa as Europe’s largest consumer P2P
149
532
1,021
2005 2010 2015 2018
Annual origination volumes since inception (£m)
Our future strategy
Customer aligned products…
Unsecured Personal LoanNo early repayment fees
Credit cardsNo 0% transfers
Saving & investmentsNo front book and back
book pricing differentiationPrioritising existing customers
Auto loansSoft checkTransparent pricing
…delivered through award winning experience…
…embracing open banking to enable customers to get in control of their finances
Simplifying finances: Everything in one place, securely and in customers’ control
Snappy insights: To act on, whetherto avoid chargesor work towardsa bigger goal
Great value:Personalisedpricing
The best place for money…
A one-stop shop for managing money = the best place for money
2020+
A next generation bank
Best personal loan provider
Most trusted peer to peer platform
2018
Speedy fixed term savings and straightforward creditcards
Seamlessly combining savings and P2P investments
2019+
Providing fairer, better value products
Putting customers in control with powerful insight and simple tools
Easy, intuitive and built for the future