How to profit from peer-to-peer lending

‘Alternative finance’ - including ‘peer-to-peer (P2P) lending’ and ‘crowdfunding’ - is an internet-era rival to traditional banks. There are opportunities for smart investors, says David C Stevenson.

Alternative finance' is an internet-era rival to traditional banks. There are opportunities for smart investors, says David C Stevenson.

The financial crisis of 2008 was good news for one area of the finance industry alternative finance'. This catch-all term covers activities such as peer-to-peer (P2P) lending' and crowdfunding' in short, companies that enable individuals and firms to raise money while cutting out banks. While companies such as P2P pioneer Zopa already existed, widespread disenchantment with traditional banks, and the low interest rates on offer, brought a surge of interest in Zopa and rivals such as RateSetter and Funding Circle, who promised to use the internet to establish marketplaces where savers looking for a higher return on their money could lend it to borrowers looking for a better rate than banks were offering. Even the government could get behind this vision the Treasury has consistently helped the sector along, especially platforms that target the small business (SME) sector, such as Funding Circle.

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David C. Stevenson
Contributor

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com

David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space. 

Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business. 

David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust. 

In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.