When is peer-to-peer lending not peer-to-peer lending? Some would argue it’s when one of those peers is, in fact, a bank. Alternative funding providers were once hailed as the potential undoing of banks but are nowadays happy to court the City bigwigs in order to strengthen their reputation.
Today there’s news of a tie-up between Metro Bank and peer-to-peer (P2P) lending pioneers Zopa. Until now the money lent to consumers through Zopa has been provided by individuals looking for a more exciting return than they could get through a savings account, but now Metro Bank will be pushing out an undisclosed amount of cash through the platform.
‘This is another milestone for Zopa and the P2P industry as this partnership brings together two key challengers to the traditional financial services landscape and signals our intent to become a mainstream service,’ said Zopa co-founder and CEO Giles Andrews. ‘This unique partnership is the first of its kind in the retail banking sector and a clear sign that Zopa is a trusted platform not only for consumers but also for institutions to deploy their funds.’
The move effectively means that Zopa will be acting as a broker for Metro Bank, allowing it to outsource the marketing, credit checks and collection that it would otherwise need to deal with itself. Those who saw P2P lending as way of marginalising banks may be disappointed with its transformation into an asset class, but it’s arguably quite promising news.
Metro Bank is itself a disruptive force – the big banks could learn from its seven-day opening hours, instant debit cards and generally friendlier face. Ultimately what’s important to Zopa customers is their ability to easily access finance at a reasonable rate, and getting a wad of Metro Bank cash through its platform will only improve in things in that regard.