Happy New Year everyone. I hope 2013 is treating you well so far. On January 1st of 2012 I made five predictions for p2p lending in 2012, so now it is time to go back and review how I did. I will also make five new predictions for 2013.
Review of my 2012 predictions
Lending Club will reach $1 billion in total loans – this was by no means a certainty as we started 2012 but I expected Lending Club would break this milestone in December. They did it a month earlier.
Prosper will reach $500 million in total loans – Prosper ended the year at $443 million in total loans issued since inception, so I was a bit too optimistic on this one.
Lending Club will post a profitable quarter – this one probably has come true but we will have to wait a while to know for sure. In the third quarter of 2012 Lending Club posted a quarter where they were cash flow positive and I expect they will carry that momentum over to the last quarter and show profitability for the first time.
A third competitor will take on Prosper and Lending Club – I was completely wrong on this point as no real competitor emerged in 2012. Peerform are still around but they are only available to accredited investors and they were pretty quiet this year – they are not a direct competitor at this stage.
More states will become available for investors – there was no movement here whatsoever as the number of states available to investors at both companies remained static.
My 2013 p2p lending predictions
So now we move to this year. I have a feeling that 2013 is going to be a great year for p2p lending investors. Returns will continue to be good and the industry will maintain the solid growth of the past couple of years. So, here are my top five predictions for this year. I will be sure to check back in 365 days to see how I did.
Lending Club will issue $1.62 billion in loans in 2013
I expect the incredible growth rate of Lending Club in 2012 (179% year over year growth) to slow down somewhat in 2013. Still, with investor money continuing to pour in and an IPO on the horizon I expect another stellar year. But I am predicting the growth rate to fall to around 120-125% in 2013.
Prosper will issue $340 million in loans in 2013
Despite a very rough fourth quarter of 2012 I expect Prosper to have a much better year in 2013 and their growth rate should increase over 2012. But they will remain a distant number two in the p2p lending race.
The Prosper class action lawsuit is settled
A class action lawsuit was filed against Prosper in November 2008 that has been dragging on now for over four years. I believe that in 2013 this lawsuit will be finally put behind us. If Prosper does not win the suit, I think it will be settled anyway. Either way, the matter should be put to bed in 2013.
Peer to Business Lending Will Boom With at Least Five New Companies
In the UK peer to business lending is booming, but in the U.S. there are still virtually no companies (aside from U-Haul) that allow individuals to lend money to companies on an easy to use platform like Lending Club or Prosper. I think that will change in 2013. While the JOBS Act will allow equity investing for the masses, I am only talking about debt – loaning money to businesses. I think this cousin of p2p lending will boom in 2013.
Lending Club will release a bankruptcy remote vehicle for all investors
With LC Advisors, Lending Club has had a bankruptcy remote vehicle for large investors for some time. But retail investors have enjoyed no such protection. I think with the recent approval of Prosper Funding LLC, Lending Club will provide something similar to all investors in 2013.
What do you think? Do you have any predictions of your own. As always I would like to hear your comments.
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.