Analysts of the European P2P lending platform Robo.cash forecast that the market will fully recover by Q4 2021 and hit €6.2 bn under the neutral scenario.
The researchers have analysed the volume of loans funded through P2P platforms in the past 5 years and proposed a possible scenario of the market’s development. It suggests that the segment went through its lowest point in Q2 of 2020, the second wave of the pandemic will end by the end of 2020, and the market will be recovering gradually in 2021.
The European P2P lending market had been growing by about 42% year-over-year since 2016. In 2020, the COVID-19 pandemic intervened, slowing down the world economy, including the P2P lending market. However, the second wave of the pandemic which began in the autumn is unlikely to be as damaging for the segment. Thus, in September 2020 the market’s volume slightly reduced by 4% compared to August, but resumed its growth in October, which is normal even during a stable period. Based on the data for 10 months of 2020, the researchers predict that the volume of the market will total to €4.3 bn this year. With the experience gained after the first wave of the crisis, P2P platforms which navigated through it successfully are better positioned to weather new lockdowns and benefit from subsequent market recovery. Given this, the market volume is forecast to reach €6.2 bn in 2021 exceeding the pre-crisis levels.
“We expect two key trends to shape the P2P lending market in the coming year. First, with the fall of the disposable income of European households by 5.9% and unemployment growing to 8.3% it will be crucial for P2P loan originators to ensure the quality of their portfolios. Second, with traditional banks tightening their lending requirements, more people will turn to P2P lending. Both trends present an opportunity for the players with the best risk management strategies to consolidate their market share and deliver higher risk-adjusted returns to investors in the P2P market,” – the analysts of Robo.cash comment.