The three largest peer-to-peer lenders are now based outside the capital but the sector insists there is still fintech life left in London.
P2P trade body the 36H Group last month released industry data that revealed the largest UK lenders since the departure of Zopa, Funding Circle and RateSetter from retail lending.
All three of those former P2P lending giants were based in London but the new makeup of the sector is different.
The UK’s largest P2P lender, Assetz Capital – with a loanbook of £1.4bn – is based in Manchester.
The second largest, Folk2Folk – with more than £500m of loans by the end of 2021 – is headquartered in Cornwall, followed by Birmingham-based CrowdProperty, which has a loanbook of almost £180m.
Mike Bristow, chief executive of CrowdProperty, says being in the Midlands has geographical advantages as the platform’s staff can travel more easily around the UK as well as into the capital.
“One of the biggest challenges a lot of the London-based, early-stage proptech businesses have is attraction and retention of talent,” Bristow said.
“Being based in close proximity to similar businesses leads to a lot of competition, increased staffing costs and churn.
“In Birmingham, there is a very strong talent pool that continues to grow, albeit crucially with less extreme demand than in London.
“Therefore we attract staff more easily and at a lower cost, and retain them for a lot longer, again pointing to a better-resourced and coherent business.”
There are still five P2P lenders in the top 10 that have their headquarters in London.
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These include Invest & Fund and ArchOver.
Charlotte Marsh, managing director of ArchOver, said having headquarters in a city like London benefits platforms by boosting their market presence and attracting talent, even if the office space is only used for part of the working week.
A spokesperson for Invest & Fund said while the platform is headquartered in London, it also has a back-office operation in Hastings and regional teams outside of the capital.
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“We don’t feel any particular requirement for the P2P industry to be purely London centric, although we consider there remains value in having a presence in London as the financial centre of the UK,” the spokesperson said.
“Equally, we cater to clients across the country, and our broader business structure reflects that.”
Mike Carter, head of platform lending for the 36H Group, said London remains an attractive destination but said these figures show that it does not have to be the first choice for P2P platforms, particularly as the government is encouraging investment across the rest of the UK.