How baby boomer investors are driving P2P lending

Baby boomers, those born between 1946 and 1964, have sometimes been described as the “Lucky Generation.”

This group has spent the best part of their years in peaceful, economically prosperous times. In many countries, it’s a generation that has enjoyed a social security safety net and expanding personal freedoms. On top of this, they’ve managed to buy their own homes and build a degree of wealth that succeeding generations might only be able to dream of.

Photo credit: Farhan Perdana

As the youngest of this demographic moves into their senior years, the group as a whole is embracing digital technologies. These include digital-enabled services and banking products, with one of the most novel, compelling banking solutions being peer-to-peer (P2P) lending.

It’s worth taking a look at how this generation could be affecting and driving P2P lending, especially in markets like Oceania and Asia.

Enthusiastic participants

There’s one convincing argument that this generation could be a major driving force behind P2P lending, and that’s how this demographic has already embraced the sharing economy. Baby boomers have actively participated both as consumers and as service providers in this industry.

Research shows that 44% of those over 55 years old have been making use of services such as Uber, Airbnb, and eBay to boost their income. A significant percentage said that the on-demand economy allowed them to generate income from assets and skills that they otherwise wouldn’t have been able to profit from.

These avenues include selling things online, renting out a spare room, driving for a ride-sharing platform, or participating in P2P lending. As they enter retirement and work less, these platforms provide a convenient way to earn additional income.

Four percent of baby boomers have already made use of P2P lending platforms to generate extra cash. The comparatively lower rate of adoption at the moment could be due to the fact that P2P platforms are newer than more established segments.

Indeed, newer sharing-economy services such as P2P lending and online outsourcing have been found to offer the largest relative potential for user growth. The estimated addressable market for Australia’s P2P lenders could be around US$75 billion.

In New Zealand, the sector is also at a nascent stage, though with strong potential for growth. With baby boomers controlling a significant percentage of the country’s total disposable income spending, they could end up being major investors and consumers in the space when it does mature.

Similarly, Asia also has a strong demand for P2P lending, with the market growing from US$108 billion to US$330 billion between 2015 and 2017.

Malaysia and Indonesia, in particular, have experienced strong demand, but the Singaporean market has demonstrated the highest interest in the sector. Currently, the biggest players in the industry include Funding Societies, MoolahSense, Capital Match, CoAssets, Minterest, SeedIn, and Validus.

MoolahSense is backed by high-profile firms like East Ventures and Pix Vine Capital. Funding Societies is also active in Indonesia and Malaysia and is backed by Sequoia India and SoftBank Ventures Asia Corp.

Sharing economy’s appeal

Market volatility and low interest rates fueling participation

Summing up