P2P market at risk of monopolisation and cyber attacks
The European peer-to-peer lending market has been urged to be more aware of the threats of monopolisation and cyber attacks in order to ensure its sustainability as it grows.
A new study by investment platform Robocash found that the continental European P2P market is “characterised by an upward trend” during economically stable conditions. Over the past seven years, the market has grown by an average of 2.5 per cent per month.
However, Robocash warned that there are some underlying risks that the market needs to be aware of.
Top of the list is the threat posed by cyber attacks, particularly as artificial intelligence and decentralized finance become more commonplace.
Read more: Robocash suspends UnaPay loans
Another risk in need of regulation is the monopolisation of the industry, Robocash noted.
“A year ago, market concentration was low and the intensity of competition was medium,” said Robocash analysts.
“However, in the last 12 months there has been an increase in concentration, i.e. a rise in the level of monopolisation.
“Without proper attention to anti-monopolistic measures, the industry could return to the 2020 state, when a key player held more than 60 per cent of the entire market.”
Read more: Robocash: P2P market poised to rival S&P 500 in returns
The platform also flagged a number of other emerging risks, such as the possibility of a rise in default activity which could cause P2P returns to decline. Furthermore, the growing attractiveness of other assets may lead to an outflow of investors’ funds from P2P.
“The latter however has a low probability,” added the Robocash analysts.
“Investors are likely to prefer a more stable source of earnings in the form of P2P lending over, for instance, cryptocurrency, which is highly volatile and unregulated.”
Read more: Robocash forecasts 23 per cent rise in net worth of European investors
