IFISA SPECIAL Who wants them, who’s got them, what they’re doing with them >> 16
Banks bite back
ISSUE 5 | FEBRUARY 2017
High street banks are investing in innovative technologies and developing peer-to-peer “hybrid” models, as competition with the sector heats up TRADITIONAL LENDERS ARE RAMPING UP investment in new technology, amid intensifying competition from P2P platforms, say industry insiders. “The need for banks to innovate is clear,” said Katrin Herrling, chief executive and co-founder of alternative finance platform Funding Xchange. “Some have lost significant market share, for example to Funding Circle in the business lending space. “Banks need to ask themselves, how do I compete with the slicker experience that [P2P lenders] provide and how do I reduce my underwriting costs
by automating some or all of my underwriting so I can compete with newer players?” Alistair Hutt, head of third-party
partnerships for RBS, said that “without a doubt,” P2P was one of the factors that had caused banks to change. “What the emergence of P2P
did for some banks was make sure they were accelerating their own development and sorting their legacy systems,”
he said. Last month Barclays launched a SME lending app, which drastically reduces the amount of time that the bank takes to approve a business loan, from a few weeks to under an hour. “We have seen businesses choosing funding from P2Ps due to the speed and ease with which they could provide funding, even where this has cost the customer a premium,” said Daniel Fairhead, head of lending product management at Barclays. “We recognised this some time ago, and by enabling preassessed lending for our customers, we can process a loan >> 4