I have been in London this week for our third annual LendIt Europe conference. In many ways this was the best event we have ever done – the speakers were excellent, everything was conveniently located on the same floor and the event ran smoothly.
We kicked things off with the CEO of Funding Circle, Samir Desai, giving the opening keynote for the second year in a row. He made an excellent case for why, despite all the challenges in 2016, we are about to enter a golden age for marketplace lending. He listed three mega-trends:
- Banks are pulling back from SME lending
- Investors are unable to generate yield from traditional investments.
- Internet marketplaces are disrupting many big industries.
Samir also pointed out the fact that marketplaces do not carry any systemic risk even at a very large scale. This is because there is no maturity transformation, the loan duration of the borrower and the investment horizon of the investor are perfectly matched. Also, there is no inherent leverage in the system – dollars are invested in a 1:1 way.