Alternative lending is set to significantly shake up the traditional banking market and increase access to finance but bring with it a number of risks, according to a survey of global credit experts.
Three-quarters of experts believe that alternative lenders – such as Zopa and other peer-to-peer specialists – pose a real threat to banks, with 19 per cent believing them to be a “big threat”.
The study, by the University of Edinburgh’s business school, found that more than half of those polled felt the market for finance would become more competitive as a result, while 53 per cent believe that alternative lending models are likely to increase access to finance in the next five years.
But 73 per cent thought there are dangers in the methods the new crop of alternative lenders are using to decide who to lend to and how much to lend. Just over a quarter stated alternative lenders may be relaxing controls on lending too much, and the same proportion felt some companies could be circumventing regulations in order to operate.
One in five of those questioned thought the newer lenders may be more open to fraud.
The survey of 200 international credit experts – published today – coincides with the business school’s recent credit risk and credit control conference.
The experts were broadly optimistic about the impact of the new breed of challenger brands for consumers and small businesses, with nearly half believing credit will become more available in the country they live in during the next six months.
Jonathan Crook, director of the business school’s credit research centre, said: “The view of our expert delegation was that traditional banks need to adapt to keep up with this new, nimble market – and fast.”