P2P lenders stake their claim in NZ loan market
New Zealand’s chief financial regulator, the Financial Markets Authority (FMA), has for the first time published data from the country's peer-to-peer (P2P) lending sector, revealing the increasing prominence of alternative lenders in the NZ market.
According to the data, New Zealand-based P2P lenders held more than $NZ 290m of loans on their books at the end of the 2017 financial year (EOFY2017).
This is the first time P2P lending data has been published by the FMA, offering a unique 'snapshot' of the lending market and activity within the country. The FMA requires P2P lending and crowdfunding licensees to submit information returns every year, from which the data were compiled.
Of the more than $NZ 290m loaned by New Zealand-based P2P services at EOFY2017, $259.9m was loaned to individuals, with the remaining portion advanced to businesses.
Typically found online, peer-to-peer lending services, which act as intermediaries, match borrowers with individuals who are willing to fund their loans.
The data revealed that 7,991 ‘lenders’ had active investments at EOFY2017, with more than 200,000 borrowers registered with P2P lending intermediaries.
Much like their overseas counterparts, NZ’s peer-to-peer lenders appear to be zeroing in on the personal loans market, with the average value of new loans issued sitting at $NZ 8,771.
Peer-to-peer lending services legally entered the New Zealand market in 2013, following the introduction of the Financial Markets Conduct Act 2013, which permitted licensing of intermediary service providers, including peer-to-peer and crowdfunding lenders.
At the time of the survey, seven peer-to-peer lending services were licenced to operate in New Zealand, with an additional licence issued since the data were collected.
Garth Stanish, FMA Director of Capital Markets, attributed the rapid rise of P2P lending services “flexible regime created by (the New Zealand) parliament through the Financial Markets Conduct Act.”
“The FMA is committed to facilitating and encouraging innovation, provided the risks to investors are mitigated,” Stanish said. “We are also keen to publish data to enable companies and investors to understand the trends in different markets.”
The P2P lending market has grown significantly across the globe, taking the challenge to the traditional lending sector. From a standing start of just $US1 billion in 2010, Morgan Stanley predicts P2P lenders could command up to $490 billion globally by 2020.