Giles Andrews' appointment marks another step on P2P’s road to maturity

  • Students of the history of finance may one day look back on Giles Andrews’ appointment to the Chair of MarketInvoice (MI) as a major milestone in the evolution of the P2P sector.

    Taken at face value, two of the most powerful houses in Alternative Finance – one being MI, the other Zopa, the daddy of all P2P platforms which was co-founded by Mr Andrews, OBE, in 2005 – will continue as separate entities, but operate under the stewardship of the same non-executive chairman.

    Questions about conflicts of interest have been deftly swept aside with the explanation that the two businesses operate in very different corners of the market. Zopa’s roots are grounded in putting consumer borrowers together with consumer lenders for mutual benefit, whereas MarketInvoice helps SMEs to raise money from high-net-worth and institutional lenders who buy trade invoices at a discount through the platform.

    Both have been successful in their own fields. Zopa passed the £2bn in loans mark at the end of last year while MI, formed in 2011, has financed an impressive £1.3bn of invoices to date. But they have something else in common, too – for all their rapid growth in volume, both have been unprofitable.

    Without question, the name of the Alternative Finance game is securing market share. A great deal of money has been spent in pursuit of achieving market dominance in the short term in the hope and expectation of reaping huge financial rewards further down the line. The stakes are high.

    Giles Andrews has been brought in to oversee MI’s ‘growth phase’, which includes strategy, new product launches, strategic partnerships and hires. As someone who has been instrumental in changing the landscape of business finance, he is well qualified to help in this process.

    However, it remains the case that banks remain the dominant force in the UK lending market by some distance, which is why alliances and partnerships are being formed between the various parties – banks on one side, because they have access to cheap capital and a vast customer base, and P2P platforms on the other, because they have the smart technology, leaner overheads and are faster on their feet.

    The inevitability of consolidation in the Alternative Finance sector has been a topic of conversation for some time, but so far there has been very little action. Maybe the MI/Zopa joint chairman arrangement is a first tentative step down this path. If it is, at least the initiative has come from within the sector rather from outside. The dead hand of a clearing bank on the P2P tiller still seems some way off.

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