The potential of P2P lending on the Danish market

Traditional ways of finance are losing their monopoly; one particular disruption is the concept of crowdfunding (Smidstrup, 2016).  A spin off of the Sharing Economy, crowdfunding is in positive growth globally.  While crowdfunding is typically associated with start-up companies, this report seeks to focus only on one area of crowdfunding that is on a positive trend in its own right, that is P2P lending.  Whilst P2P lending is growing rapidly in the USA, the UK and several areas of Europe; including Switzerland and Germany, it is still in its infancy stage in Denmark.

Generation Z is the generation that has been brought up in a society greatly affected by the financial crisis of 2008, a causal effect being their skepticism of the financial sector.  This is confounded by the lack of focus on personal relationship by financial institutions in their attempts to offer digital solutions to this generation of digital natives. Whilst this generation is described as self-educating and in want of the convenience that digital solutions provide, at the same time, the financial sector is unfamiliar to this generation.

At the same time, from both our focus groups and interviews with the CEO’s of the two CF companies it is evident that there is a general lack of awareness of the concept of Crowdfunding.  However, according to their financial situation it would appear that they have the means to invest in marketing campaigns in order to increase awareness.

The project finds that Generation Z priorities P2P lending over quick loans.  In considering the substantial growth of quick loans on the Danish market, this would indicate a strong potential for P2P lending on the Danish market.

Traditional ways of finance are losing their monopoly; one particular disruption is the concept of crowdfunding (Smidstrup, 2016).  A spin off of the Sharing Economy, crowdfunding is in positive growth globally.  While crowdfunding is typically associated with start-up companies, this report seeks to focus only on one area of crowdfunding that is on a positive trend in its own right, that is P2P lending.  Whilst P2P lending is growing rapidly in the USA, the UK and several areas of Europe; including Switzerland and Germany, it is still in its infancy stage in Denmark.

Thus this report seeks to investigate the future potential of P2P lending on the Danish market.  With this in mind, the investigation will focus not on the more mature consumer tied to their traditional financial provider by larger loans e.g. mortgage, car etc. but rather a more mobile target group, a younger generation with a currently low income and thus no major tie-in to their financial institution.  In addition, in considering the digital nature of P2P lending we seek to couple the low tie-in to financial institution with a target group defined as unloyal to any specific service provider, thus actively mobile and where digital platforms are a fundamental part of their everyday life.  As such, our investigation focuses on Generation Z.

Participation at conference on ”The sharing Economy”.

Participation at conference on “Digitalisation of the financial sector”.

Conducting interviews with a diverse range of actors including; professors, private researchers, financial institutions and regulators.

Carrying out focus interviews with students in order to verify data collection from existing sources and expert interviews.

Communication of findings to internal and external network.

The research will use a case study: the first, and at the time of conducting the research, August 2016, only P2P lending platform on the Danish market; that is Better Rates A/S.

The research seeks to identify the potential of P2P lending on the Danish market.  Whilst literature was originally collected from a wide range of international sources, in order to gain insight into the Danish market, it was considered necessary to interview experts within the Danish market and the sector of focus; i.e. the financial sector, as well as experts in the area of the focus target group, Generation Z.  For this purpose, interviews are conducted with a diverse range of actors including; professors, private researchers, financial institutions and regulators.

Furthermore, in order to verify the data collected from existing sources and expert interviews, the researchers carries out focus interviews with students from several disciplines.

The results from the project are expected to be compiled in an article.

The research seeks to identify the potential of P2P lending on the Danish market.  Whilst literature was originally collected from a wide range of international sources, in order to gain insight into the Danish market, it was considered necessary to interview experts within the Danish market and the sector of focus; i.e. the financial sector, as well as experts in the area of the focus target group, Generation Z.