Peer loans ‘ no bank risk’
AUSTRALIANS could be borrowing an estimated $ 22 billion from each other rather than banks within five years, but experts say the rise of peerto- peer lending shouldn’t bother the country’s major banks.
Morningstar head of financials, David Ellis says the big four banks – the Commonwealth, ANZ, Westpac and National Australia Bank – will be able to withstand the rise of the nascent sector without much fuss.
That’s despite investment bank Morgan Stanley’s prediction peer- topeer lenders could account for 6 per cent of personal loans and 12 per cent of small business loans by 2020.
He says while peer- to- peer lenders are targeting the low hanging fruit – unsecured loans, where interest rates can be exorbitant – the banks’ bread and butter of mortgages and higher level business lending wasn’t threatened. “I can’t really see it really making any inroads into lending that’s more complex and where there’s a security involved,” he said.
Peer- to- peer lending allows borrowers to source loans directly from individuals willing to lend to them.