European P2P lending market sees cyclical wave of activity

European peer-to-peer lending volumes regularly increase from October to March and fall between April and September, Robo.cash research has found.

Analysis from the European P2P lending platform also suggested that new customer growth typically occurs between September and February.

Robo.cash analysts studied the dynamics of investment volumes, profitability and new customer inflows on more than 60 continental European P2P platforms over the last eight years.

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The analysts said that the market cyclicality is due to the industry’s marketing activities and consumer habits.

 “So, for example, with the advent of the new year, people tend to set new goals and make financial plans,” Robo.cash said. “At the same time, if any ‘average’ investor rebalances or builds a portfolio from scratch at the beginning of the year, the share of P2P in it will be low. The capitalisation of this asset still is not comparable to the stock or crypto markets. Nevertheless, it will not be zero, therefore, the activity falls on the first quarter of each year.”

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Additionally, Robo.cash analysts highlighted other factors that could impact the P2P market, including central bank rates and local legislation, although these are not cyclical.

The analysts added that a certain connection can be made with the maturity of loans. If a significant amount of P2P loans have a closing date in a specific month, investors will receive large sums back during this period and can reinvest them promptly, increasing the total market volume.

“These factors probably cannot be called strictly seasonal, but periodically they may overlap with existing seasonal patterns,” the analysts said. “In any case, in addition to seasonality, there is clearly cyclicality in the market, which has an impact on the strategy of both the platforms themselves and their investors.”

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