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Platforms with smaller shares become competitive on the P2P-lending market

Analysts of the European investment platform Robo.cash predict that in the next year or two a small number of new lending platforms will enter the P2P-market. Moreover, most of them will probably be part of financial groups and will offer more favorable conditions in order to compete with older players.

Robo.cash researchers have analyzed data from P2PMarketData.com and found that about 80% of the entire European consumer and business lending market belong to 10 P2P-platforms, which indicates a high market concentration. Such a situation is characterized by the fact that “large players” maintain their positions, and significant structural changes in the market are not possible. Notably, the platforms that occupy the main positions are mostly mixed, that is, they work both with business and with consumers. Thus, they create a competitive advantage by diversifying their supply.

However, the P2P-market is undergoing changes in the ratio of market shares from large players to smaller ones. The sphere of P2P investments is becoming more demanding on the quality of the offered products and therefore, more promising for the development of platforms with smaller shares. Interestingly, the number of platforms working within financial groups has increased. In the face of growing uncertainty, launching a platform as a part of the group might reduce the risks when entering a new market. 

If we assess the situation from a far-off perspective, we can see that the concentration of freshly launched platforms reached its peak in 2013-2016. During these years, about 60% of all currently existing platforms entered the European market. From 2017 to the present, the emergence of new platforms has slowed down. 

“Future development of the European P2P-lending market will be primarily driven by existing platforms rather than new players. Market concentration will continue to weaken gradually as the corona crisis made many P2P-platforms with small market shares competitive enough to be able to change their positions in the market” - comment the analysts at Robo.cash.