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

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.

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  • Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.