Modulr: The leading strategies for growth in P2P lending and crowdfunding businesses

The leading strategies for growth in P2P lending and crowdfunding businesses

Modulr
July 2019

As the alternative finance market develops and matures, competition is becoming increasingly fierce.

With these challenging market conditions in mind, it’s critical that P2P lenders and crowdfunding platforms pursue the right strategies to maximise their own growth potential. Those organisations who choose to progress without a clear plan of action risk leaving themselves vulnerable when competing with more strategic rivals.

Here are a few growth strategies leaders in the sector are adopting to enhance their own market position and potential.

Luring business away from banks

In the space of a decade, lenders have gone from serving the customers who struggled to raise bank finance, to competing directly with the banks themselves on traditional business loans.

Offering a number of advantages over banks, including better customer service, quicker onboarding and approvals, and more responsive automated platforms, alternative finance lenders are leveraging their capabilities to drive growth in this sector. 

However, it’s still not easy to compete as a lack of brand awareness, marketing resource and volume of established customer relationships make it difficult to challenge the banks and their scale.  

Channel partnering

By partnering and integrating with other organisations, lenders are enhancing their level of access to prospects and customers, particularly in the SME sector. Banks, accounting firms, business associations and universities all present opportunities to widen reach and many alternative finance organisations are taking full advantage.

Internationalisation

Many lenders are looking beyond the shores of the UK to grow their business. With the European market expanding fast and offering significant opportunities, the potential is high, although challenges around multiple currencies and different regulatory regimes make it tough to succeed.  

Product/Sector diversification

Most lending platforms have built their initial success on a single product category, such as P2P loans or invoice financing. These organisations are now moving away from this focused model and are diversifying into other areas to maximise their growth potential. By continuously developing new and innovative products to match evolving market conditions and customer needs, alternative finance providers are branching out for the benefit of their customers and their bottom line.

A push to retain customers, rather than acquire  

With a view to driving growth, some organisations are investing their efforts on improving customer retention, over winning new customers. This strategy is often pursued by ensuring customer satisfaction is optimised at every commercial touchpoint and engagement.

Cost reduction

Some alternative finance companies are focusing their efforts for growth on maximising their profitability, and this often comes down to good cost management. Most are looking for ways to scale without incurring significantly increased operational costs. Organisations who achieve this ambition will have a major competitive advantage in the market, now and into the future.

With so many opportunities for growth, P2P lenders and crowdfunding platforms must choose the strategy that suits their businesses’ capabilities to maximise their potential. By choosing the right strategy, alternative finance organisations can effectively compete in a hostile market and drive ongoing business growth.

For more insight into growth opportunities in alternative finance, check out our guide to innovative payments processing.

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