Riding The Waves Of The P2P Lending Market

Congrats to all involved with the Lending Club IPO. This is what it’s all about: Building something from scratch, enduring the ups and downs, then going public and making a boatload of money.

I’m no Wall Street analyst, so I couldn’t tell you if the ~$8.5 billion valuation that Lending Club (LC) hit at the end of its first day of trading is a fair assessment of its current or future value. But what I can tell you is that there are people who are deceiving themselves about what Lending Club is, and what its future prospects are. The delusions are reflected in articles like CNBC’s How LendingClub Aims To End Banking As We Know It, which states:

“LendingClub is setting out to transform the banking world. To get there, it’s following a playbook popularized by some of the world’s biggest tech companies. Any true comparison between LendingClub and the world’s most valuable tech companies is premature, of course.”

I guess any “true” comparisons between LendingClub and the world’s most valuable lending and investment providers aren’t comparisons worth making, eh?

My take: The conditions which made Lending Club possible and got it this far are temporal and likely to change in the next few years–to LC’s detriment.

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First of all, can’t somebody out there come up with a better term for what Lending Club is than calling it a “peer-to-peer” lender? The institutional investors providing funds on the marketplace are anything but “peers” to the people looking to borrow money on the site.

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There are two conditions that have enabled Lending Club to exist and prosper (get it?). The first is a pool of investors that would like to get a better return on their available capital than what they can get from other (i.e., existing) investment alternatives.

The second is a pool of borrowers who need funds and are willing to pay a higher rate than they would have to pay elsewhere, or, more likely, that need funds and are unable to get those funds from other (i.e., existing) sources.

The size of these two pools–and their willingness to use Lending Club to meet their needs–have been sufficiently large, and growing over the past few years to fuel Lending Club’s growth and drive the IPO.

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The questions to answer are: 1) Why did these pools grow over the past few years? 2) Will they continue to grow in the future?

The investor pool grew largely because of two reasons: 1) incredibly low interest rates, making it hard to find acceptable returns, and 2) even in the face of an increasing DJIA, professional money managers are always looking for superior returns to outshine the competition.

Why did the borrower pool grow? Because the economy sucked, and, to some extent, because some  (many?) individuals are mismanaging their financial lives–many are, or have been, unable to pay off existing loans and credit card balances. In fact, 83%of Lending Club borrowers report using their LC loans to refinance existing loans or pay off their credit cards.

Reported Loan Purpose

20141215 LendingClubSource: Lending Club

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So what happens going forward? It mostly depends on the state of the economy, the direction that interest rates go in, and the P2P lending market itself.

If we experience a period of economic prosperity, and people are more able to pay off their loans and credit cards, Lending Club may very well see a steep drop in loan volume. Roughly 62% of Lending Club’s 2014 loan volume came from borrowers with a Grade C or lower rating. What happens when the economy improves and the Gen Y population–who start off adult life with lower credit scores and grades–mature and move into higher creditworthiness classes? Is there another pool of risky borrowers to fill the void? And if interest rates rise, could the rates that borrowers must pay on the LC platform might be even too high for them to stomach? Grades E, F, and G are already paying interest rates in excess of 20%. We’re getting close to payday lending territory, no?

Will the investor pool grow? This is comprised of two components: 1) the number of investors, and 2) the amount of funds those investors put into the marketplace. I can’t talk to #2, but it seems likely there are limitations to the number of investors who can or will participate in LC. As the marketplace has grown, competition to fund the best borrowing opportunities has grown, and has even spawned new companies who help investors identify their best opportunities. As a result–much like the stock market itself–professional investors have an edge over individual, amateur investors. As a result, the number of individuals investing in LC will likely remain capped.

And with a first day valuation of $8.5 billion, I’m guessing that venture capitalists across Silicon Valley are firing up their bongs and thinking “Dude! I gotta invest in one of these pee-pee lending marketplaces!” And that means more competition for Lending Club. Increased competition will likely result in some erosion of LC’s overall share.

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Claims that Lending Club is “disruptive” or that it will “end banking as we know it” are so totally ridiculous that it has to make you wonder what the claimants were smoking when they made these claims. Lending Club is a niche player in the lending market, a fringe player.

According to the Federal Reserve, consumer loans issued by the 100 largest banks (ranked by assets) grew 6.5% between Q1 2012 and Q3 2014 to nearly $1.18 trillion. From the 2015 Financial Brand Marketing Survey, 43% of respondents indicated that their FI’s loan volume increased by more than 10% in 2014 over 2013 levels.

Disruption? Ending banking as we know it? Hardly. More like creating a niche somewhere between credit card borrowing and payday lending.

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Bottom line: I can’t tell if you $8.5 billion is a fair valuation for Lending Club. What I can tell you is that, if and when the economy improves, it’s going to face some stiff challenges.

That said, I would love to have a ride on the boat.

Delusions Of UnBanking

In a TechCringe (cuz that’s what most articles on that site make me do) titled Startups And The Un-Banking Of America, a VC writes:

“While critical to our economy, banks are generally inefficient, have high fixed costs and don’t exactly elicit happy thoughts from the average consumer. It’s for these reasons, among others, that the biggest opportunities in the financial world revolve around the disintermediation of these banks and core financial services.”

My take: The same could be said of dentists, yet the world of dentistry doesn’t seem to garner even .001% of the disruptive-related attention that banks do.

There are some assertions in the TC article that make me wonder if VC really means “very confused” instead of “venture capitalist.” Let’s look at some of these statements, and my take on them.

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VC: “It’s not hard to imagine that a majority of the people in the U.S. could be “banking” with startups, in one form or another, in the next three to five years.”

My take: For this sentence to be true, we need to make one of a couple of edits:

1) If you’re tripping on some groovy LSD, it’s not hard to imagine that a majority of the people in the U.S. could be “banking” with startups, in one form or another, in the next three to five years.

or…

2) It’s not hard to imagine that a majority of the people in the U.S. could be “banking” with startups, in one form or another, in the next three to five years, if you consider firms like Bank of America and Wells Fargo to be “startups” (since they’ve only been around for ~150 of the millions of years that life has existed on this planet).

I guess that, strictly speaking, it’s not hard to imagine that a majority of Americans could be banking with startups in three to five years, but it’s complete delusion to think that a majority of Americans will be banking with startups in that time frame.

After five years of being in business, Simple (according to its own accidentally leaked email) has just a little more than 33k active customers. That’s about one-tenth of one percent of the number of customers that Bank of America has. I don’t care how evil and bad you think that bank is–no where close to any meaningful number of people will be leaving the bank any time soon.

And, in fact, when consumers have left their banks in the past few years, it’s a lot more likely that they will leave to go other established banks and credit unions.

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VC: “The credit crisis showed the tech industry that one of the biggest areas of opportunity for startups was in re-imagining consumer lending. People were looking to alternative forms of lending for answers and thanks to the problems above, interest in solutions like peer-to-peer lending were on the rise. Not surprisingly, a cohort of companies emerged to take advantage of these trends, beginning with Prosper, which was soon followed by Lending Club and a litany of others. At the core of this emerging market was the desire to take banks out of the equation and connect investors directly with those in need of capital. In other words, disintermediation.”

My take: Nothing like re-writing history to suit your own purposes. Prosper was founded in 2005, Lending Club in 2006–well before the credit crisis. These firms did not “emerge to take advantage of these trends” caused by the credit crisis.

People did, indeed, look to alternative forms of lending for credit, however. Not because of some interest in startups looking to disintermediate (or disrupt) traditional banks, but because they needed money.The statement “at the core of this emerging market was the desire to take banks out of the equation” may be true from the startups’ perspective, but it’s not true of consumers.

And, in fact, Lending Club has evolved to become anything but a P2P marketplace. Today, the majority of funds provided to the marketplace come from institutional investors. Bottom line: There is little evidence to suggest that the traditional banking system is being disintermediated in providing credit to consumers.

p.s. Citing Lending Club’s cumulative lending numbers–which so many P2P lending proponents do to apparently demonstrate the “growing” trend–is quantipulative. Why don’t we show Wells Fargo’s cumulative lending over the past five years and see how it compares?

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VC: “The growing mobility of the average consumer has allowed businesses to spring up and grow by assuming roles traditionally reserved for banks. Check is one of these businesses trying to do an “end-around” on banks by giving consumers the ability to aggregate and manage all of their critical banking information and bills in one place — on their smartphones. Rather than consumers being forced to go to their banks’ websites, their utility company’s website and so on, it put all of these services in one place.”

My take: I have done the sizing/forecasting of consumers’ bill pay behaviors–twice, first in 2010 and again in late 2013. I can tell you that, while third-party sites (like Check) have achieved some gains in bill pay volume over the past few years, the percentage of consumers’ monthly bills that are paid through these sites are miniscule.

What kind of delusion fuels a statement like “rather than consumers being forced to go to their banks’ websites, their utility company’s website and so on, it put all of these services in one place”? What do you think bank sites do? (Answer: They put bill pay capabilities in one place).

Banks used to think that their bill pay sites were superior to biller sites because consumers didn’t have to “hunt all over the Internet” to pay their bills. I really have had bankers tell me that over the years. It still stands as one of the stupidest things I’ve ever heard a banker say.

Not only is it perfectly convenient for consumers to get an email from their biller, click a link, and pay the bill, but the real trend in consumer bill pay isn’t a move to third-party sites (i.e. disintermediation), it’s the shift to direct debit. You wacky Gen Yers are happy to set up your monthly bills to be paid automatically every month!

The other reality in the bill pay space is that the success of Check (in particular) has come more from its work to simplify and improve the billing process for billers than for consumers.

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The TC article goes on to talk about the “disintermediation of the second tier” and the potential impact of Bitcoin. I’m not qualified to comment on these areas (although you might argue I wasn’t qualified to comment on the topics I did discuss), so maybe whatever the VC said about these things are right. I don’t know.

But I do know–or at least, I’m willing to assert and bet–that that un-banking of America (as is relates to debit, credit, and bill pay) is nowhere in the making. Especially not in the next three to five years.

Big thanks go out to @sytaylor for bringing the TC article to my attention.

Credit Unions: Reinvent P2P Lending

Some university professors recently researched the effect of personal relationships on P2P lending platforms. They discovered three “effects”:

  • Pipe effect. Friends of a borrower, especially close and off-line friends, act as financial “pipes” by lending money to the borrower.
  • Social herding effect. When friends of a potential lender, especially close friends, place a bid, a “social herding” effect occurs as the potential lender is likely to follow with a bid.
  • Prism effect. A friend’s endorsements via partially funding a loan reflects negatively (i.e., becomes a “prism”) on the value of the loan to a third party.

What the study shows is that the volume and patterns of lending and borrowing are influenced by, and strengthened by, the extent of the relationship between participating borrowers and lenders.

My take: Credit unions (and community banks) should interpret these findings to find ways of introducing P2P lending-type practices into their lending processes.

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The 2013 Financial Brand survey of marketers found that — not surprisingly — lending is at the top of the list of marketing priorities for the near future.

How are credit unions and community unions going to compete for the borrowing business that’s out there? If it’s going to be by berating big banks, pointing to the results of bogus customer experience surveys, and going on and on about how great their customer service is…then I’m not sure the results will be all that much better than they’ve been in the past.

Which is to say, not very successful.

What the results of the academic study suggests to me is that a credit union or community bank could improve its market share of the lending business in an area by creating a community of lenders and borrowers to redirect and/or insulate the flow of funds away from other sources and destinations to the CU or community bank.

I’m not suggesting that a credit union or community bank try to recreate a Prosper or Lending Club. Those firms have gone through a regulatory rigamaroll that no CU or bank wants to go through.

But I can’t help but think that are ways to avoid that regulatory nightmare and still achieve some of the feel of the P2P lending platform.

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On a P2P platform like Prosper, a lender (or multiple lenders) — OK, wait. Let’s call them for what they really are: Investors. On a P2P platform, an investor or investors lend(s) money to a borrower. The platform isn’t really an intermediary, it’s simply an enabler — i.e., enabling two or more parties to find each other and execute a transaction.

What does a bank/CU do? It finds depositors, takes their money, and promises something in return (where that something may or may not be financial). It then takes those deposits and lends some portion of it out to borrowers it deems worthy of receiving those funds.

The bank/CU is an intermediary. Depositors have no idea who gets the money, nor do they have any say in who gets the money or at what rate. There is no relationship or connection between depositors and borrowers.

But what if there was a relationship or connection? The academic study implies that the “platform” — in this case, the bank or CU — would benefit because lenders (in this case, depositors) and borrowers would be more likely to transact with each other.

In other words, one way for credit unions and community banks to gain market share in the lending market is to create a mechanism for depositors (lenders) and borrowers to create and strengthen a relationship.

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That “relationship” doesn’t necessarily have to be a one-to-one, named connection. A bank or CU depositor could provide input into determining who receives their deposits (or some percentage of it) by some dimension that characterized a borrower. For example, the depositor could indicate that they would like their funds lent to someone buying their first home, or to a small business owner who needs funds to grow their business, or to someone looking to pay off debts. They wouldn’t necessarily get to direct 100% of their deposits, but by giving depositors an ability to direct some percentage of the funds, it would approximate what’s happening on a P2P lending platform.

By making the elections of funds deployment public, other community members would see where their peers are looking to direct funds, and — as the study implies — become more likely to elect that their funds go to the same places. With publicly available information about where depositors would like to direct their funds, potential borrowers who fit the description(s) would become more likely to turn to the bank/CU for a loan, knowing that the FI is looking for borrowers like them. 

The deposit nature of the relationship wouldn’t be changed — that is, the deposits would not become investments in the sense that they are on a P2P lending platform. The bank/CU is still an intermediary determining the creditworthiness of a borrower and the rate at which that borrower qualifies for a loan. But the depositor gets to provide some input into who gets the money (or some percentage of it).

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I realize I haven’t thought through this completely, and, for all I know, there’s  some regulatory issue that stops this in its tracks. I’m just thinking about how smaller FIs are going to compete with the big ones for the coveted lending market.

P2P Lending — The Bank And Credit Union Way

I’ve often thought that banks could easily squash P2P “lenders” like Prosper and Lending Club by creating an online lending marketplace of their own. In addition to the organic traffic they could drive to the site, they could refer loans they decide to pass on themselves, and give the option to investors/savers looking for higher rates of return than they’d get with CDs to lend money in the marketplace.

Lending Club charges a processing fee ranging from 2.25% to 4.5% of the loan amount, and hits investors with a service charge of 1% of each payment received from a borrower. Seems to me that banks could easily underprice that.

But there’s another P2P lending opportunity for banks and credit unions to capitalize on.

Do you know how much money is lent between family, friends, and acquaintances? I doubt that you do, because, as far as I know, Aite Group is the only firm to have estimated the volume of P2P transactions that occur in the US.

We’ve estimated that US consumers borrow (and presumably, repay) nearly $75 billion from each other (and not from financial institutions or other types of businesses, legal or otherwise) each year. On average, every household in the US makes two loan payments to other people for money they’ve borrowed.

That last number is actually pretty useless, since a large percentage of households don’t make any P2P transactions for the purpose of repaying loans. But in our research on consumers who use alternative financial services (e.g.,  payday loans, check cashing services, etc.), borrowing from family and friends is the second most popular source of funds (after overdrawing on their checking accounts, which might not count).

In fact, of the alternative financial services customers that Aite Group surveyed, one in four borrowed from family or friends three or more times in 2010, and more than one-third did so more often in2010 than they did in 2009.

This is a huge P2P payment opportunity for banks. Note that I didn’t say it was a P2P lending opportunity.

How are these loans and agreements documented? I have no idea, but my bet is that in many cases they’re not documented at all. After all, among friends, verbal agreement is just fine, right?

But if there was a cheap (i.e., free) and convenient way to capture the details of that loan, and a way to actually transfer the money between participants — cheaply and conveniently — don’t you think a lot of people would use it?

The money in the P2P lending space for banks isn’t from loan processing fees or from taking a cut on the interest rates. The money is in the movement of funds.

To date, banks, as a whole, have floundered with their P2P payment offerings. CashEdge and Zashpay have gained some traction, but have hardly become household names. PayPal is a household name, but the vast majority of their business isn’t P2P.

Why haven’t P2P payments taken off?

Banks are marketing it all wrong. They’re pitching the “electronic” aspect. Big deal. People don’t care about channels and methods. They simply care about what’s the most convenient thing to do when they want to do it.

Instead, banks should be marketing convenient alternatives to transacting certain types of P2P payments — repaying loans to other people being one type.

Banks could provide an online capability for the parties to document the terms of the agreement, establish repayment parameters, and enable either the automatic or manual transfer of funds. All for the low fee of a P2P transaction, and not a cut on the loan. No future disagreements about the terms of the agreement, and proof of payment.

In addition to improve the way existing customers transact P2P loans between family/friends, this approach might help attract un- and under-banked consumers who could fund an account that could either be a savings account or take the form of a prepaid card account. 

The real winner, though, will be P2P payments. By driving trial of the service, consumers may find it convenient for other use cases. 

Led Zopalin

P2P lender Zopa has decided that wiith the leaves falling all around (here in New England, at least), it was time it was on its way. According to Zopa’s site:

While our model is doing very well in current market conditions, the US has been adversely affected in a way that just couldn’t have been predicted when we launched. So, sadly, our US colleagues have decided to withdraw from the US marketplace.”

When I read the words that it told me it made me sad, sad, sad. But on the Forum Solutions site (run by Forum CU, one of Zopa’s US partners), Doug True quotes Sarah Mason from Affinity Plus CU as saying:

As one of the credit unions who were partnered with Zopa, I would like to clarify that we have no credit availability issues and have changed none of our lending practices. This decision was made by Zopa.”

Hmmm. These would appear to be contradictory statements — but you know sometimes words have two meanings.

My take: I have to admit to being a littled dazed and confused. The “current market condition” — i.e., credit crunch — means traditional sources of funding (FI2P, or financial institution to person) is drying up. So, borrowers should be turning to alternatives sources of funds like P2P sites, no?

And with the steep drop in the stock market, investors/lenders are looking for places to put their money that will generate decent returns. So they should be turning to alternatives like P2P sites too, no? And feel even more secure about Zopa, since it’s (or was) backed by solid financial institutions, right?

In the battle for [evermore] customers, increased demand for alternative sources of funds + increased supply of funds available for alternative lending sounds like a stairway to heaven to me.

But apparently not. So what happened? I’m guessing it was a combination of:

1. The market not being ready. According to Forrester Research, consumers show “little interest [in P2P lending], mainly because they are skeptical of the benefits, are concerned about the risks, and are almost completely in the dark about firms that offer these services.”

2. The marketing not being sufficient. The flip side of factor #1 is that Zopa and its partners didn’t put enough marketing horsepower into their efforts. I remember a conversation I had in 2000 with Doug Lebda, founder of LendingTree. Although he believed that having “banks compete over you” was a better value proposition than the prevailing business model, he recognized that what he was asking consumers to change the way they went about getting a loan. And as such, he knew had to commit a lot of marketing dollars in educating consumers about this new approach and to create a new consumer brand.

3. The management team(s) not being able to focus. Management can’t disperse its attention to too many competing initiatives. So Zopa may be making a smart decision to narrow its attention and resources to the markets — namely, the UK and Italy — that promise to be the most profitable in the short term, and help fund its long term growth plans. CU contemplating starting new CUSOs should keep this in mind, too.

Bottom line: I wrote back in May that I thought Zopa had the winning business model in the P2P space. I think the key to P2P success is not through the disintermediation of financial institutions, but leveraging their risk management capabilities. I don’t think Zopa’s departure from the US is a sign that its business model was wrong.

But this should be a wake-up call to the existing players in the P2P market that their “better mousetrap” is no guarantee of success. Some marketing pundits love to say that all the rules of marketing have changed. They’re wrong. Social networks, word-of-mouth marketing, viral videos, etc. are just new ways of creating awareness, interest, and consideration among consumers. The need to manage the customer life cycle (awareness, interest, consideration, purchase) hasn’t changed — and never will.

Many dreams come true — and some have silver linings — but if P2P sites are going to gain any market share, they’ll need to spend a pocketful of gold on marketing.

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Discrimination In P2P Lending?

A couple of economics professors have published a fascinating report, that raises a lot of questions about P2P lending.

The authors analyzed all loan applications listed during a one-year period on Prosper.com. They found that listings submitted with a picture of a African-American person — or no picture at all — were significantly less likely to get funded than listings from whites with similar financial information. If funded, African-Americans were subject to a slightly higher rate.

They also discovered some discrimination against older borrowers, overweight borrowers, and borrowers that they considered to be unattractive. They did find, however, that lenders discriminated in favor of members of the military and women (especially single women).

What complicates this picture, though, is that the site’s black borrowers were more likely to default (by 36%) than the white borrowers with similar financial information. In addition, members of the military were 49% more likely than non-military borrowers to default.

My take: I’ve commented before on what I consider to be the disingenuous marketing of P2P lending sites. Prosper’s claim that it was “created to make consumer lending more financially and socially rewarding for everyone” isn’t exactly supported by the professors’ findings.

Beyond this, though, the study raises legal issues (I think — I might be wrong here. I’m not sure what the legal requirements are regarding Prosper and other P2P sites). Banks are prevented from redlining — should P2P lenders be prohibited from discriminating, as well? And if there truly is discrimination happening, what is (or should be) Prosper.com’s role in identifying it or preventing it?

Seems to me that Prosper (and possibly other P2P lending sites) runs the risk of becoming just a way for the affluent to lend to the affluent. According to the study, while borrowers with a credit grade of at least 640 accounted for just 17% all listings, they comprised 46% of all funded listings. Is this really all that different from traditional banks?

I remain somewhat skeptical that P2P sites are going to make a big dent in the banks’ lending businesses, and even more skeptical of the sites’ claims to be providing a social service.

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The Disingenuous Marketing Of P2P Lending Sites

Ponder the following question:

Entity A lends $10,000 to Johnny Jones at a rate of 6%. Entity B lends $10,000 to Johnny Jones at a rate of 6%. Which entity made the socially rewarding loan?

Well, if Entity A was Johnny’s neighbor Billy Smith, and Entity B was the bank down the street — let’s say Bank of America — then there are some who would have you believe that only Entity A made the socially rewarding contribution.

These are quotes from two P2P lending sites:

  • “Prosper…was created to make consumer lending more financially and socially rewarding for everyone.”
  • “When you lend through Fynanz you also perform a social good.”

My take: Hogwash. And that wasn’t my first choice of words.

According to Javelin Research (reported here):

Higher-income and younger consumers are the most active users (of P2P lending sites). In Javelin’s survey, 36% of borrowers said they used the service for the better interest rate. Some (33%) turned to P2P to avoid using credit cards. Others (27%) go that route because they do not qualify for a loan from a bank or credit union.”

Since when did lending to high-income consumers become a social good?

Oh, I’m sure defenders of the claims will tell that me that, surely, some borrowers at these sites are economically disadvantaged and can’t get loans at large banks and credit unions.

But let’s not forget that Prosper charges a one to three percent loan closing fee, and earns money servicing the loans for lenders. It’s not a charity.

The type of marketing that some P2P lending sites practice — playing up the social good — is an interesting and new trend. Historically, financial services marketing played on two emotions: fear and greed. The fear of losing money, and the greed of making a lot of money.

Now there’s a new tactic: Play to the desire to contribute to the overall social good. There’s nothing wrong with this — on the contrary, it’s a welcome and needed development. In fact, it might be one of the baby boomers’ biggest failures that the desire to make social contributions hasn’t been more prevalent, and more inculcated into marketing practices over the past 20 to 30 years.

But to think that P2P lending is a major contributor to this social good is naive, and for these sites to market themselves that way is disingenuous.

Javelin predicts that demand for P2P lending will quadruple over the next five years. Is it reasonable to think that the desire to lend to the economically disadvantaged will drive that growth? Or that the majority of borrowers will even be the economically disadvantaged? No, on both counts.

P2P lending sites will succeed because they’ll deliver on the greed factor, not the social contribution factor. Their ability to match people with money to invest with others who need it — and to offer those lenders (investors?) better returns than they would get otherwise will drive the growth.

Javelin also believes that the desire to pay off credit card debt will P2P lending demand. As a potential lender (investor?), I think that’s pretty risky.

But that’s exactly what the P2P lending sites should be capitalizing on. Helping potential lenders (investors?) understand how participating in P2P lending can and should be part of their portfolio of investments. Help me understand which investments in my portfolio have a similar risk/return profile as P2P loans, and could potentially be reallocated to P2P lending.

Is it lending or investing?

My questioning the substitution of the term investor for lender above is important here.

Is lending the same as investing? (For that matter is saving the same as investing? That’s something I think credit unions should be contemplating). My parents were encouraged to save. My generation was encouraged to save and invest. The notion of lending isn’t part of the language for many potential participants — i.e. suppliers — of P2P lending sites.

So while we typically think of marketing as an effort to create product demand, for P2P lending sites, marketing will be critical to procure the supply side of the equation, as well.

Relying on the desire to contribute the social good won’t be sufficient.

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