In a report, Deloitte claimed that marketplace lending (MPL) will account for only 6% of total lending by 2025, even if banks do not innovate to compete with P2P lenders. 

The report stated that although borrowers valued the benefits of speed and convenience offered by MPLs, they were likely to prove “temporary” as banks replicate successful innovation in that area.

Neil Tomlinson, Head of UK Banking at Deloitte said: “Our findings suggest that MPLs are unlikely to pose a threat to banks in the mass market.

“In the medium term, however, MPLs are likely to find a series of profitable niches to exploit, such as borrowing which falls outside banks’ risk appetite, and segments that value speed and convenience enough to pay a premium”.

Despite recognising MPLs’ customer service advantage, Deloitte warned that should banks replicate the efficiency and convenience of P2P lending, its market share could be reduced to as little as 2% by 2025.

Deloitte cited banks’ ability to borrow cheaply via customer deposits as their main advantage over MPLs, and suggested that in order to become a disruptive threat, P2P lenders would need to undermine this funding advantage by drawing money away from deposits and into P2P lending.

However, Kevin Caley, Founder and Chairman of P2P lender ThinCats said that the report appears to “misunderstand how P2P lending works” after claiming high rates would deter businesses from turning to alternative finance.

“Rates of lending and borrowing are dictated by supply and demand, so if businesses are no longer willing to pay them, the market dictates that they will fall.

“[That] said, the industry is under no illusion that it will topple high-street banks, which have existed for hundreds of years, nor does it want to become like them.”

The Peer-to-Peer Finance Association (P2PFA) also refuted Deloitte’s claims, highlighting P2P lending’s growth and the £5bn lent in the sector since 2010.

Robert Pettigrew, Policy Director at the P2PFA, explained: “Many of the conclusions in the Deloitte report depend on assumptions which do not reflect the development of P2P lending to date.

“P2P lending platforms have already established a permanent presence in the mainstream financial services sector, and the experience of the last economic downturn was favourable: not a single investor lost their capital, and platform performance was positive compared with the operation of the banking sector.”

Narinder Khattoare, Sales Director at Kuflink Bridging, also dismissed Deloitte’s report, insisting that “predictions are not foolproof, as we all know”.