Platform casualties

Whereas health authorities and governments alike are updating Corona related casualty curves, it could make sense to do the same in a P2P context. There have already been several confirmed pre-Corona cases this year; Kuetzal, Envestio, Monethera etc., but with no appearent link to the current economic climate. 

However, for the next platforms to collapse, the Corona crisis might be the trigger. One indicator of the financial health of a platform is the loan volume. Steady volumes is usually good for business whereas great volatility is typically not a good sign. In a time of crises however, large variations are to be expected and this is indeed confirmed by the March 2020 numbers.

With an average of -25 % across the platforms, the general tendency is clearly dark red. It seems very dramatic but remember that similar trends are also seen elsewhere including the global stock markets. Some of these numbers stand out and deserve an additional comment.

Bondster

Removed the exit option due to Corona, which probably explains why this platform wasn’t hit harder.

Estateguru

Almost no change in volume but projects do take longer to be funded indicating that some investors have left or are less eager to invest.

Mintos

I would assume that many new P2P investors start with Mintos. This might partially explain the slightly larger impact, as these less experienced investors are more prone to panic.

Swaper

Also seems largely unaffected. Have experienced severe cash drag prior to Corona but now the cash drag seems to have vanished.

General comment

No doubt that P2P has been affected. However, the issue with P2P scam sites has surely amplified and deepened the crisis. Also, it is commonly known that in a time of crisis, investors will prefer low risk options, which P2P is not.

If you dive into the actual numbers behind, a lot of the platforms are not worse off than 1 year ago. Mintos and Viventor who have experienced the largest declines are both at the same level as February 2019.

What we do not know yet is if this tendency will continue next month. I expect that the decline will continue but I expect it to be less steep, perhaps even stabilising. This will nevertheless still continue to stress the platforms. Let’s see what the consequences will be.