Many people still think of computers as impersonal, not real. We think of money as not real, but we earn it and spend it. We think of banks as impersonal, and we want to change that.
Kiki Loizou, writing in the Times this weekend, says that 'peer-to-peer lenders grow up and join the real world.' (A subscription may be required.) We expected to read about innovations among peer-to-peer lenders, perhaps linked to the efforts the lenders' trade body the Peer-to-Peer Finance Association (P2PFA) has been making to improve the performance of the sector, its reputation, and its accountability to its investors (this interview with CEO Christine Farnish, on 'growth and regulation', was published in September.)
What we found was a different story, but definitely an interesting one. Lending platform Folk2Folk has announced plans to open ten shops in town centres. Which, as Ms. Loizou puts it, "sound similar to old-fashioned bank branches."
This is not a new departure, In fact, it's been part of Folk2Folk's business model since yje platform first opened for business - as this local news bulletin from 2013 shows.
Folk2Folk was founded by by Mark Parnall and Louis Mathers, two equity partners in Parnalls, a well-established firm of solicitors based in Launceston, Cornwall. The firm mediates loans to local businesses, with a strong emphasis on the local nature of the lender-borrower relationship. To our knowledge, Folk2Folk is the only peer-to-peer lender in the UK to have a network of branch offices. Its focus on the rural economy of the South West, and on personal relationships, as well as the firm's origin story, makes this a viable business model and route to market.
But is it really evidence that the peer-to-peer sector is 'growing up' ? To us, it looks more like a single firm bucking the trend, not only in alternative finance, but in mainstream banking too. Our big retail banks have closed over 600 branches in a year, over 1,000 branches in two years. It's a race to see who we can do the most the fastest. Even the Yorkshire Building Society has joined in the trend.
We think that Folk2Folk has done something clever and useful, but so have many others. We know our parents likes cheques books, branches, and sitting down in the manager's office, but most of us born after 1960 have only unpleasant experiences of visiting a bank branch. And our children do as much as possible through apps on their phones.
The trend we welcome, and that we want to see more of, is financial insitutions getting closer to their customers. For us, the real world means real relationships, and we think that alternative finance is rather good at relationships.
(If you're interested in a version of the Folk2Folk story that isn't paywalled, try this article in last Thursday's City AM.