Crowd Funding Where Will it End Up, by Ablrate.com

Peer lending is in the ascendance and the future looks bright, but where can it all end up? I have had several conversations recently with people involved in the industry and the answer to that question has received a number of answers that I didn’t expect. We have our own ideas at Ablrate.com but here are some of the responses from our peers, who shall remain nameless.

1. We will all end up as banks.

An odd answer from an industry that has made its name on poking the banks and their inefficient ways of doing things, but I do see the logic. It is not something that will necessarily be driven by the entrepreneurs who created these businesses but by regulation. I can see a time when these companies are handling billions of pounds (and some have already originated and completed very close to this) that the banks start asking the regulators why there is a difference between them and their new competitors.
If we have learned anything in the past it is that the regulators will start looking closer and closer as these companies get bigger and bigger. It is a natural reaction also to start offering other products to your client base that may bring these platforms in even closer competition than the banks. If I were a VC right now, that is what I would be thinking about. I don’t think it would be a good thing, but it is a distinct possibility. From our perspective Ablrate wouldn’t see us moving in this direction.

2. There will be a few major players and all the others will be bought through consolidation of the industry.
I can see that. There are a number of factors that would suggest this will happen. Firstly, as the industry matures, it will become more complicated for platforms to keep up with the technology being deployed by established businesses. This will mean that users will gravitate to those sites with more tools and more firepower, leaving the smaller businesses with little choice but to join the band wagon and sell up. This is the same for the loans, borrowers will gravitate to those sites where loans can get taken quickly.
The second reason is money. If you have been running a business for a few years and someone comes along and offers you a cheque for a few million pounds – that is not bad for a few years work. It is worth pointing out, delicately, that the people who have started many of these peer lending businesses are not 19 years olds out of college. They tend to be more mature and one would suggest more acceptable of a reasonable offer for their business. Ablrate was created to solve our own issues with funding aircraft, but one can never say never, and if it made sense for our business and our lenders to work with a larger platform, we could see the benefit in that.

3. Platforms will become less necessary due to aggregation of loan inventory.
This is probably the one I agree with the most (although I don’t like the idea). Peer lending platforms are a function of loan origination, the technical aspects of platforms, at least now, are less relevant than yield and inventory. It is perfectly reasonable to assume that the central aggregation of loans will come in a Money Supermarket or Zoopla type of aggregation where platforms cease to become that important and loan origination is the main business of those running the platforms.
I know this is already happening, so it is not a case of if but when. The thing is how will platforms deal with it and will they really want to give up control and their central premise for existing? I am not so sure about that. However, if we start to see the majority of lenders going to these aggregating sites then you better cast your line where the fish are or you are going to go hungry.
I hope whatever happens that there can be a happy medium between how the industry grows and platforms progress because one of the things that has been great about running Ablrate.com is the community that has built up on the platform. I fear that this kind personal service would be lost with consolidation and aggregation and we would be back talking to call centers in India. If that happens, it’s only a matter of time before ‘Crowd Funding II – The Sequel’ gets launched because the ‘Crowd’ in ‘Crowd Funding’ is what it is all about… or at least it should be.

Read the latsest article on Ablrate by Rueters

https://uk.reuters.com/article/2014/08/25/airplane-crowdfunding-idUKL5N0QS1NU20140825

About Ablrate

Ablrate launched the worlds first asset backed peer to peer lending platform dealing primarily in aircraft deals. It allows investors for the first time to invest in aircraft transactions with high ROI\\’s.

Ablrate strives to be the global leader in asset backed lending against aircraft and other quality assets. Our purpose is to enable individuals and businesses to manage their own financial risk and returns. Helping our clients succeed and get a better, fairer deal in the world\\’s rapidly evolving financial markets. Our mission is to be the best in the eyes of our clients, employees and shareholders. For more information go to www.ablrate.com