LFP064 – P2P in the US, China and UK with Peter Renton

Lendit US 2017After organising nearly 1,000 folks in the O2 for Europe’s largest P2P conference ever I managed to grab Peter long enough to have a fascinating tour of the globe and P2P sitrep in the three major hubs.

Peter Renton PhotoPeter Renton has perhaps has more of a broad and deep understanding of P2P worldwide than anyone.

When he first came on the show way back in LFP015 he shared with us the fascinating history of US P2P with its hugely up and down roller-coaster road.

Since then he has created the world’s go-to conferences on P2P in the US, China and Europe which gives him a unique insight into what’s what and where.

It’s a big world and P2P is a vast domain these days so there is plenty to discuss. Key topics are: – the “next album” syndrome – how do you cope with doing great work or conferences, get congratulated and then asked (every time) “so what next”.

– the relatively more “corporate” vibe of US P2P (& Fintech) compared to the UK

– why US P2P is so “suits and ties”

– alternative finance is now very much “middle aged white men in suits” reflecting the demographic of existing FS perhaps; will this lack of diversity/increasing staidness impact creativity and innovation?

– Key themes from the US in 2016:

  • the first fall in inflows ever this year
  • Lendit’s management issues leading to investors having a perfect reason for staying on the side
  • the last couple of months having seen more inflows
  • despite the falling tide there has only been one minor bankruptcy
  • the focus on positive cashflow (&compliance) not just growth [cf similar in the UK]
  • the credit issues with the lower grade credits and what this all means
  • the third quarter was a record quarter for securitisations

– Key themes from China at present:

  • if the US is roughly 10x the size of the UK P2P market then China is roughly 10x the US
  • personal credit access is a new and big deal in China as previously the banking sector’s role had been to fund big state corporates
  • people used to personally borrow money P2P but offline – so in a way this approach is just moving online
  • as a result it is in a way bypassing the mechanisms set up in the west
  • “I don’t look at China as behind the US but as far ahead of the US in many areas”
  • everything is done on a mobile phone in China – you underwrite, you invest millions of dollars on your phone and you can buy your daily newspaper off a street vendor on your phone [&imagine all the data flows from that]
  • different privacy laws in China mean they can use a wider source of alternative data to assess credit
  • ~3,000 platforms but only around 100-150 of any consequence
  • “China gets a bad rap” re fraud – most companies are honest and new regulations  will mean about 90% of the country’s platforms will go out of business
  • “A Chinese platform will in the next decade reach the $1trn mark in originations and then they will reach the $1trn mark in annual loan volumes”
  • China’s history as formerly the largest economy in the world and likelihood of regaining that mantle
  • a good anecdote about how Chinese trade volumes with the US have grown in the past couple of decades
  • “this is China’s century” … “starting connections with China now is a smart move”

– Some key highlights for Peter and I from the recent Lendit Europe conference

  • the vibe – I found this as more dull in terms of what the platforms will say on the record; the role of still awaiting FCA regulatory approval in this
  • the keynote presentation Samir Desai CEO Funding Circle Keynote,
  • maturity transformation arose as an issue many times in the conference
  • I reference a great paper “The Rule of Law in the Regulatory State” by the “Grumpy Economist” John Cochrane
  • Lord Turner an excellent presentation including reflections of how regulatory approaches in FS as a whole need to change from micro-supervision to “putting better brakes in lorries rather than more supervisors in cabs”
  • his re-contextualisation of his widely spread comments on P2P being a potential disaster – basically a misquote
  • an SME panel which was focusing on “back tot he future” and the necessity of company visits for larger deals
  • Tom Blomfield from app-only Monzo Bank as being an example of innovation and real Fintech change in contrast to the more staid P2P vibe; how banks may screw-up PSD2 et al via having poor APIs
  • Peter’s wrap-up overview of the Lendit Europe 2016 conference

– 5,000 attendees expected for Lendit US 2017 back in New York. Plenty of new topics and angles. If you want to go and want to save 15% with a London Fintech Podcast special discount code CLICK HERE and enter LondonFP17USA

And much much more 🙂

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