Claus Lehmann publishes P2P-Banking, a news blog on p2p lending and P2P-Kredite.com, a German-language blog on p2p lending with a large readership of German, Swiss and Austrian investors.
You have a large followership on your blog and discussion forum. Tell us a little about how you built that.
I came across p2p lending in 2006 by chance and really liked the concept. At that time there was very little information available for investors (aside from the marketing material supplied by the platforms). There was definitely a need for reviews and first-hand experiences which led me to start my blogs in 2007. Also, I was certain that p2p lending marketplaces would also be launched in continental Europe (in 2006 they only existed in UK and US), so there would be a demand for a more international view on developments evolving.
What is the value that p2p platforms create (for their customers, investors, society)?
Investors obviously seek a good return on investment. Also, p2p lending offers the opportunity for diversification into an asset class that is not directly correlated to other asset classes (like stock). Borrowers like the offered loans terms. Not necessarily the interest rate only, but also the convenience and the reduced time it takes to get a loan. I don’t really think p2p lending has any impact on society. For that, the differences to conventional loans are too small.
You're investing on a number of platforms. What role do receivables play in your portfolio?
I see receivables as one part of my diversification. One advantage of the short duration is that experiences and results can be gained in a relatively short time span.
What are some of the recent trends in the p2p world that investors should keep an eye out for?
There are more and more specialised platforms that focus on a certain type of loans or industry sector and try to optimise results in that field. On the other hand, there are first signs of aggregators that want to become an interface between the investors and multiple platforms and help the investor to automatically achieve widespread diversification across multiple platforms and markets.
Also, further in the future, it will be interesting if a Pan-European platform will develop that offers loans in the whole EU. But this is hard to achieve as regulation and market conditions differ widely across Europe
As an experienced investor in p2p space, what kind of sustainable return can a lender realistically expect through peer to peer lending in your opinion?
The achievable yield depends mostly on two factors. Risk-tolerance the investor is willing to take and amount of time allocated to investing (passive investing vs active investing). It is therefore not easy to state just one figure, but I think, 6-8% ROI (before tax) should currently be achievable as a passive investor.
A lot of articles around the web mention that you can expect 5-12% ROI from p2p. What advice would you give to newcomer investors on how to arrive at a 5-12% ROI?
As I am very often asked that, I published the article 10 Tips for New P2P Lending Investors - How to Start on my blog.
Can you recommend any trustworthy sources for a newcomer who wants to learn about the p2p lending space?
Good sources include Altfi, Lendacademy and P2Pindependentforum.
How, in your opinion, can traditional banks play a role in the p2p lending space?
Banks are still finding the right way to deal with p2p lending. Many banks (especially in the US and UK) invest in loans using the p2p lending marketplace as a transaction base. Several banks invested into the equity of p2p lending marketplaces and became shareholders to gain inside knowledge on the trends and technology and to own a piece of the growing market. So far the few attempts of banks to build an own p2p lending marketplace from scratch have been unsuccessful.
Especially in the consumer lending space banks will have to form a strategy on how to deal with the impact of the new players. Interestingly some of the p2p lending may evolve and become more like banks.