Tapping into the growing alternative investments market in the Netherlands, Rabobank is trialing a new P2P lending platform connecting HNW individuals with SMEs.
According to our 2015 Global Wealth Managers Survey, Dutch HNW investors allocate 5% of their wealth into alternative investments (a figure below the regional average, and with most alternative allocations in hedge funds and private equity). However, the alternative investments market has been growing rapidly, with recent regulatory updates likely to encourage the market to grow further.
The Rabo & Co P2P lending platform will connect businesses (SME customers seeking loans for expansion or refinancing) with Rabobank’s private banking clients. In order to invest through the service clients need to have investable assets of at least €1m and invest €100,000 per business.
Participating businesses announce their financing requests on the platform and investors choose which loan they wish to finance, with Rabobank providing at least 50% of each loan during the initial six-month pilot. If the platform proves successful, Rabobank intends to open the platform to institutional investors as well.
Limiting the businesses seeking lending to Rabobank’s existing customers is a smart move and may alleviate concerns surrounding the recent difficulties experienced by some P2P lenders, thus encouraging more investments.
While still a pilot, the service will be an interesting example of how banks can benefit from the current boom of P2P lending by setting up their own services, rather than watching the emergence of new platforms from the side lines. As per our survey, global demand for alternatives is increasing and it is likely that other competitors are likely to follow Rabobank’s example, particularly if it proves successful.
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