Marketplace Lending 101

A perfect storm

In the wake of the global financial crisis, UK banks pulled back from lending, owing to higher regulatory capital requirements and greater regulatory and shareholder scrutiny of their business models. They have adopted more risk-averse lending strategies in this environment, with more stringent reviews of the creditworthiness of borrowers.

Furthermore, the low-interest rate environment brought about by the global financial crisis has made it challenging for savers and investors to generate satisfactory returns. This has led investors to explore other investment options in a quest for yield.

These factors have created the conditions for the marketplace lending model to gain traction in the UK.