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Podcast 08: Interview with Liberum Capital About the State of P2P Lending

by Peter Renton on March 21, 2014

Liberum Capital logo

While in London last week I sat down at the offices of Liberum Capital, a UK investment bank, to talk with Cormac Leech and his team. Liberum is somewhat unique in that they have a team devoted to researching the p2p lending market – they have probably more knowledge about this sector than any other investment bank in the UK or the US.

As I mentioned in my post about AltFi Cormac Leech presented his research report last week at that conference. It is the most comprehensive report I have ever seen on the state of the UK and US p2p lending markets. And I am not the only one who thinks this. I have had both the CEO of Lending Club and the Chairman of Prosper mention the Liberum report to me this past week as a valuable resource for the industry. We delve into this report in great detail in today’s podcast episode.

In this podcast you will learn:

  • The new peer to peer lending fund that Liberum recently created and sold to Marshall Wace.
  • An explanation of the lack of productivity gains in the banking industry (link to academic paper by Thomas Philippon).
  • Why p2p lending is very healthy for the financial industry.
  • Why the forces of competition are not as prevalent in banking as they are in other sectors.
  • How p2p lending can do well in a more normal interest rate environment.
  • How p2p lending is twice as efficient as regular banking.
  • Why it is a very big deal for p2p lending to be included in UK ISA accounts.
  • Why the Bank of England and UK government are very keen to support p2p lending.
  • Why Liberum values Lending Club today at $6.2 billion.
  • An explanation of Trustbuddy – the only listed p2p lending company in the world.
  • What the new Liberum AltFi index is going to cover.
  • Why he thinks there is a more robust entrepreneurial environment in the UK in p2p lending.
  • The differences in risk profiles between the US and UK p2p lending models.
  • How the p2p lending sector could save the economy 2% of GDP.

I really enjoyed this podcast – Leech and his team are just so knowledgable about this industry. They really see big things ahead for p2p lending in the next decade.

Since we chatted a few days ago there was a big announcement in the UK that will really drive the success of the platforms there over the next couple of years. P2P lending will be allowed to be included in ISAs (the UK equivalent of an IRA) for the first time – this is probably the biggest news ever for the p2p lending industry in that country.

You can subscribe to the Lend Academy Podcast via iTunes or Stitcher. There is an audio player directly below or you can download the MP3 file here.

{ 4 comments… read them below or add one }

Omar Fansa March 25, 2014 at 11:10 pm

The report by Liberum refers to Facebook launching the ‘Agree it’ app. This is incorrect, the Agree it app is a third party social app developed by Agree it (agreeit.com) not Facebook, that integrates with Facebook to access a user’s social network or social graph as Facebook refers to it.

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Peter Renton March 28, 2014 at 2:20 pm

Thanks Omar. I appreciate the clarification.

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Thomas Corbin March 27, 2014 at 7:26 am

Hello,Peter Thomas here I am sorry I have not gotten back to you sooner. Peter I guess you are a ware of the Prime Program that use to
be for people who have $10,000 or $25,000. Now you can get in with $5,000.00. What advantage do I have or others have with this new
program? or is it worth it in the long run? I started with $5,000 in 8-12-2012.With this program do I have to put in new money or what? Thank
s for your good information. Try to get back to me before 3-31-2012 that is when the program ends. Thomas 3-25-2014 9:28am 3-27-2014

Reply

Peter Renton March 29, 2014 at 12:35 am

I wrote about Lending Club PRIME in detail here:
http://www.lendacademy.com/lending-club-introduces-an-enhanced-version-of-prime/

You do not have to put in new money into PRIME as long as you have at least $5,000.

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