In this post we look at a few quick stats that might illustrate how big the peer to peer or social lending market could be in Australia. In the US which can be used as a good example for where Australia might be headed over the next 2-3 years, there are about four social lenders – Virgin Money US, Prosper.com, Lending Club and Loanio (there are others but these are the main ones at this time).
Prosper.com has reported it has generated about $200 million in social loans and has 840,000 members to date.
Virgin Money US (which was the former Circle lending business that Richard Branson invested in) has reported about $450 million is social loans to date.
In the UK it has been estimated that social loans might account for 10% of the total personal lending market by 2010.
Here is Australia we estimate the personal lending market to be about $30 billion and it is quite likely that over the next few years social lenders and P2P platforms will start to take a small share of this total market as has happened in the US and UK.
Of course unlike the US market Australia has fewer lenders in the personal loans market space and so competition is limited which leads to the higher interest rates that we see borrowers paying with less transparency. The social lenders such as Virgin Money US and Prosper.com are offering a consumer service that should help elevate the standards of the industry which, after the global financial crisis is evident is necessary for lending industries in many developed countries.
Our next post will look at the characteristics of some different investment asset classes.
