Morgan Stanley forecasts Australia’s peer-to-peer lending market will, over the next five years, surge to a $10.4 billion market and the number of players jostling for position is growing.
Peer-to-peer lender SocietyOne was one of the first movers in the Australian marketplace lending market. But since its launch in 2012, RateSetter and ThinCats have also started lending.
Local Australian startup MoneyPlace, founded by several former NAB executives, also plans to start offering loans before the end of the year.
SocietyOne CEO Matt Symons said if the bank is even partially right with its projections he’d be pretty happy with a piece of that market and won’t be “racing off” chasing international expansion.
According to Morgan Stanley, since SocietyOne launched in 2012 it has received loan demand of around $100 million and its loan balances are currently about $25 million. However, SocietyOne says the dollar value of loans is more than $30 million.
That growing demand, Symons says, shows P2P lending is disrupting the banks but it’s also opening up new options for borrowers.
“As financial services evolve, particularly with things like technology and technology platforms emerging that’s both a threat and an opportunity for banks to learn what they’re evolved customer needs are,” Symons said.
“It’s really up to banks to determine whether it’s a threat and to try and kill it or whether it’s simply an opportunity to collaborate.”
With Australia’s cash rate sitting at an historical low of 2%, many institutions haven’t been passing on the savings to consumers when it comes to unsecured loans. It’s a category which has been becoming increasingly profitable for banks and it’s this gap where P2P platforms are playing.
But Symons isn’t convinced P2P lending is going to be a market where one player takes all.
“We think that this market is large enough to, and no doubt will, sustain a number of players in the online marketplace,” he said.
With SocietyOne’s shareholders including Reinventure Group (the venture capital arm of Westpac), News Corp, and companies controlled by both James Packer and Kerry Stokes, the company now has about 50 employees and is looking at it’s next stage of growth.
An IPO isn’t a “priority” for the company at the moment but Symons said it was an option SocietyOne may look at in the future.