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Profitability and work within financial group help P2P platforms overcome the crisis

A recent study conducted by the European P2P lending platform Robo.cash has named positive profits in 2019 and work with affiliated loan originators as the 2 key factors for P2P platforms’ success during the crisis. Remarkably, interest rates, funding volumes and the platforms’ experience do not play big roles here.

The research embraced 15 most popular P2P platforms from 6 European countries which were conventionally grouped in 2 categories. A-category platforms have been performing successfully in the crisis and have already recovered at least 80% of their pre-crisis volumes. Those platforms which are still recouping their volumes after the first wave of COVID-19 and have not yet reached 80% of the funding levels prior to the crisis fall into category B.

The research indicates 2 major factors that have apparently determined the platforms’ successful performance. First, all the A-category platforms except one work with their own or fellow loan originators. Second, profitability matters. All the platforms (or financial groups they operate within) from the category A have reported positive profits in the previous year. The B-category platforms, on the other hand, finished the FY 2019 with negative profit - or have not published any reports for this period at all.

Surprisingly, interest rates and the period of the platforms’ operation have shown little to no correlation with their success during the crisis. The “size” of the platform does not determine its successful performance either. Large platforms might seem more capable of weathering the storm, but as they often work with third-party loan originators, it is not always the case. In the meantime, smaller platforms are more flexible. 

2020-10-01