Sunday, June 3, 2018

Industry Insight; Week Three

This week provided more of the same as far as our assignments. I don't want to sound repetitive about my work because nothing new has yet come along beside a large overarching project I am working on throughout the rest of the summer that pertains to the energy consumption of cryptocurrencies. I am still spending the majority of my time working on the website since there are many little things that must be fixed. The best part of my week was easily a CSFI panel discussion I had the privilege of attending.

The panel was hosted by the CSFI (Center for the Study of Financial Innovation) and it covered the current state of P2P lending, along with what the future may hold for the industry. The panel consisted of Giles Andrews of Zopa, Sarah Walker of KPMG, and Daniel Lanyon of Altfi. Giles is the current chairman and ex CEO of Zopa which is the largest P2P lender in the United Kingdom. Giles was very impressive with his answers, crafting them to be extremely clear and concise. The other panelists were very well spoken, but none of them had nearly the same industry knowledge and know-how that Giles had become equipped with since 2004 when he Co-founded Zopa.

To give a bit of background, P2P lending stands for peer to peer lending, and it is exactly what it sounds like. Peer-to-peer lending is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary. While it removes the middleman from the process, it also becomes more time consuming and includes more risk than a traditional loan from a traditional financial institution. I think it is a very cool idea that grants more power to the individual over their money. I think P2P lending has loads more room to grow and evolve as the middlemen and trusted third parties, in general, become less involved in all sorts of transactions.

If you take a step back from everything and think about it, there has been a long-standing trend of power shifting towards the consumer, or the individual, in more ways than we initially realize. This is probably rooted from a mix of our political and economic systems. A democracy offers "power" to the people who in turn get to elect those who write our rules. On the other hand, capitalism and free markets have slowly but surely put the interest of the individual, or in this case the consumer, at the forefront of their priorities. A company is basically just a middleman between an individual and their wants and needs, and if the consumer decides that said middleman is no longer reliable or trustworthy, then said middleman will cease to exist if the dissolving of trust reaches scale. I think banks and financial institutions in general realize this which is why they spend millions of dollars on advertising their name along with scooping up tech talent to help them reach consumers on a more personal level to better meet their wants and needs in the digital age.

Giles offered some insight as to how new "alternative" financial institutions such as Zopa can capitalize on the weakness that burdens traditional banks. He suggested that the most important thing Zopa is concerned with is to be fully transparent and honest with their customers. That means demystifying terms and conditions to where anyone who isn't a lawyer can read and comprehend what they say, allowing customers to fully understand what kind of financial risk they are putting themselves at when they engage in the peer-to-peer loaning process, and any other grey areas where customers may feel uneasy. I fully agree that those are important aspects and I think that many other businesses could benefit from such ethical standards. 

Overall the panel discussion was an incredible experience. The amount of insight I'm obtaining at such a young age is hard to wrap my youthful mind around, but I'm trying to soak it all in the best I can. I take notes at all my meetings and then go back to review them later in the evening. I can't wait to see what this coming week has in store for me.

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