• When is P2P lending really Peer-to-Peer?

    by SocietyOne Team | Jul 04, 2014

    Social person to person lending

    The term "Peer-to-Peer" lending can sometimes be a bit confusing. Questions are often raised about what constitutes a true person-to-person lending environment, and whether real people will continue to be at the heart of social lending as the industry evolves and matures. 

    At SocietyOne, our first priority has been to allow investors to do something they've never been able to do before – invest directly in a high quality loan portfolio with attractive fixed income returns. 

    Our research of P2P lending in overseas markets such as the US and UK indicates that the vast majority of investors don't actually individually select the loans they invest in. Rather, they tend to use a wizard portfolio builder, or invest via an intermediary that chooses loans on their behalf. In fact, we believe the actual percentage of all investors who choose loans individually is less than 5%. 

    Lending Club for example – the largest P2P lender in the world - offers a DIY option, as well as three fixed investment options with different levels of risk and return at 11.05%, 14.05% and 17.33%. Similarly, Zopa in the UK has introduced a fixed return option called "Rate Promise" alongside its traditional DIY route where it picks the investments on the investor’s behalf. It pays out an average monthly return equal to 5%pa for 5 years or 4.1%pa for 3 years. It does all the work behind the scenes – and investors sit back and receive their interest in monthly instalments. 

    Here in Australia, our early investors haven't yet expressed a preference to individually choose their loans. They prefer a more structured option and the ability to identify their model portfolio through a mandate and then have the system build it for them. This strategy still gives them control over what loans they invest in, how much and with what credit characteristics. 

    We are very excited by the enormous progress made in P2P lending since the industry was born less than a decade ago. Although the landscape is shifting dramatically, our mission has been unwavering – to connect borrowers and investors in a fundamentally more efficient, rewarding and empowering way. 


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SocietyOne Australia Pty Ltd does not guarantee any particular rate of return or the performance of any investment, nor do they guarantee the repayment of capital from the SocietyOne P2P Lending Trust. An authorised representative of and acting on behalf of Ironbark Asset Management Pty Ltd (ACN 136 679 420, AFSL 3410202) as intermediary of SocietyOne Australia Pty Ltd (ACN 151 627 977) ("SocietyOne") holder of Australian Credit Licence No. 423660, Issuer of the P2P Lending Trust.

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