The biggest P2P platforms are doubling new lending every year, driven by investments from institutions such as hedge and pension funds. In the three months to September, Lending Club, the world’s biggest P2P lender, originated $2.24bn of loans — an increase of 92 per cent year-on-year.

 

Analysts say the shift illustrates how banks face the risk of “Uberisation” as fast-growing digital challengers snatch large chunks of core lending markets, similar to the disruption of the taxi trade by Uber, the ride-hailing service.

 

P2P platforms have grown rapidly in recent years to match lenders with borrowers, providing them with cheaper and quicker loans than traditional banks. Yet, marketplace lenders still only accounted for 1.1 per cent of all new unsecured consumer credit in the US last year, according to research by Morgan Stanley.

 

The majority are focused solely on offering unsecured consumer loans and small business loans, but several are now expanding their offerings. California-based online student lender SoFi started offering prime US residential mortgages a year ago and several UK online lenders, including Landbay and LendInvest, are also providing niche property loans, such as buy-to-let mortgages.

 

To reduce their cost of funding so they can offer lower-risk products such as mortgages, P2P lenders are counting on securitisation of their loans to bring in cheaper sources of money, such as insurers and pension funds. 

 

Analysts, however, are sceptical whether P2P platforms will find it easy to break into the prime residential mortgage market because of its lower margins and longer maturities.

 

“These businesses are bound to look to diversify their business models by offering new products,” said Huw van Steenis, banking analyst at Morgan Stanley. But he added: “I think consumer lending still has the greatest potential of Uberisation as that is where there is the most cream to be skimmed off from the banks.”