Cash & Liquidity ManagementInvestment & FundingCapital MarketsP2P lending strikes chord with millennials

P2P lending strikes chord with millennials

Investors aged between 18 and 34 are four times more likely than those aged 55-plus to put money into the peer-to-peer asset class, suggests a UK survey.

The UK’s millennials are four times more likely to have money invested in peer-to- peer (P2P) than people aged 55 and over, according to research from P2P platform ThinCats, which focuses on secured business loans.

Its survey last August of a range of 2,000 adults suggests that “hamstrung by rock-bottom interest rates for most of their adult lives”, 4% of 18-34-year-olds currently have money in the emergent P2P sector, against just 1% of over-55s.

Twenty-nine per cent of millennials cited the ability to cut out banks as the sector’s biggest attraction, while 28% like that they can lend directly to businesses and 23% have had P2P recommended to them by a friend.

ThinCats suggests that among the key reasons for the P2P demographic split could be appetite for risk adjusted rate of return. Younger investors place much greater emphasis in earning high returns in exchange for greater risk, with 19% citing this as their primary motivation when investing, compared to only 9% of over-55s.

Just over half (51%) of over-55s are instead interested in stable returns and low volatility, compared to 25% of millennials.

The younger generation are also more open to innovative new investments, with 51% of 18-34 year-olds willing to give new asset classes a try, against 24% of those aged 55-plus. This openness is further evidenced by millennials’ propensity towards passion investments, with 61% of 18-34-year-old investors having invested in niche asset classes such as cars and books compared to 26% of over-55s.

“The P2P sector has been growing in popularity since it first arrived in the UK a decade ago, but many people still consider it to be something of a novel investment,” said Kevin Caley, founder and chairman of ThinCats. “That perceived novelty is perhaps why it has proved so popular with younger investors, but that could soon be about to change.”

The findings were published as the UK’s Peer-to-Peer Finance Association (P2PFA), the body representing online debt-based alternative finance companies, reported continued sector growth at the end of 2016, with £844m (US$1.06bn) of new loans in the final quarter of 2016, 64% (£544m) of which were loans to businesses.

 

Related Articles

Retail payments may be trendy, but transaction banking never goes out of fashion

Banking Retail payments may be trendy, but transaction banking never goes out of fashion

1w Lu Zurawski
Banking, technology and the shape of things to come

Banking Banking, technology and the shape of things to come

2w Jean-François Mazure
What can we expect from the banks of tomorrow?

Banking What can we expect from the banks of tomorrow?

4w Marc Hurr and Daniel Eduardo Suero
Tech-tonic shift: the Virgin-CYBG merger and the future of banking

Banking Tech-tonic shift: the Virgin-CYBG merger and the future of banking

1m Ian Matthews
New FCA banking rules designed to benefit small businesses

Banking New FCA banking rules designed to benefit small businesses

2m The Global Treasurer
Virtual account management and better banking experiences

Banking Virtual account management and better banking experiences

2m Tim Martin
Deutsche Bank introduces digital signature to speed up processes

Banking Deutsche Bank introduces digital signature to speed up processes

3m The Global Treasurer
Millennials, artificial intelligence and the future of banking

Banking Millennials, artificial intelligence and the future of banking

3m Laura Noble