I’ve written repeatedly about how peer-to-peer lending – the cuddly industry that began with the aim of disintermediating big banks by directly connecting individual borrowers with lenders – has been co-opted by the very industry it once set out to disrupt. As the industry grew and became more entwined with existing financial infrastructure, P2P lenders made a conscious decision to move away from the outdated “peer-to-peer” name.
Ever wonder how that happened? Here’s the story.
The future of the US peer-to-peer lending industry was decided in a luxurious San Francisco hotel on a spring evening last year.
On the sidelines of an alternative-lending conference, the heads of some of the biggest companies in the “P2P” space met privately to discuss rebranding the sector.
Eyeing the success of Uber and Airbnb — tech groups that have created digital marketplaces for car rides and rooms — they agreed to drop the peer-to-peer name in favour of “marketplace lending”.
In investor materials released over the following months by Lending Club, the biggest US P2P lender, as it prepared for its $5bn initial public offering, the phrase “peer-to-peer” did not appear once.