The Rise of Alternative Finance Platforms

Why UK consumers are increasingly interested in new ways to save

The UK alternative finance (‘altfi’) market has been going from strength to strength, reaching £4.6 billion in 2016, experiencing 43 percent growth. Its popularity is driven partly by ‘increased institutional investment and a sustained pick up in innovative business lending models,’ according to Finextra. Consumers have also shown a great deal of interest in alternative finance platforms as a way of squeezing more mileage from their savings during times when interest rates on more traditional savings platforms, like cash ISAs, are pitifully low.
Peer-to-peer (P2P) lending allows investors to earn a good return on their money by lending to creditworthy borrowers. P2P lending platforms, such as RateSetter, cut out costs and pass on the savings to investors and borrowers. Their stated aim is to ‘bring together people that want to invest money with people that want to borrow money’. To be successful, it’s important for lending platforms to inspire confidence in their users, and so they claim to only match investors with borrowers who pass ‘stringent criteria’.

Top 3 UK altfi platforms compared

We looked at three of the UK’s most popular alternative finance savings platforms, RateSetter, Zopa and Funding Circle, to see what consumers have been saying about them. Our analysis was drawn from conversation data on Twitter, Facebook, Instagram, blogs, forums and Tumblr ranging from Jan. 1, 2010  to Nov. 24, 2017. Our data helped us to answer questions including:

  • How is the volume of online discussion around alternative finance changing?
  • What aspects of alternative finance do consumers talk about most frequently?
  • What are the specific positive and negative points within the discussion?

From the below post volume chart we can see that conversations around Zopa, the oldest of the three platforms, were already happening on a modest level as far back as 2010.

Conversations around RateSetter and Funding Circle began to gather steam in 2011, peaking to their highest ever level shortly after. Since 2011, conversations around RateSetter and Zopa have risen, but ones around Funding Circle have declined.

Sentiment analysis around the three platforms shows Funding Circle as the highest performer in terms of positive sentiment, with 70 percent positive and only 30 percent negative. The other two had a more even balance of positive and negative, suggesting that Funding Circle is the most popular with consumers.

Uncertainty around altfi still common

In terms of discussion topics, risk was the most-discussed keyword for all three platforms, at 77 percent of total share of voice for RateSetter, 66 for Zopa and 64 for Funding Circle. This data stands in stark contrast to the share of voice around return rates, which came out at 6 percent, 4 percent and 2 percent, respectively.

The above data shows that consumers still carry a high degree of uncertainty in regards to using alternative finance platforms for their savings. This widespread concern about risk distinctly overshadows the potential for a higher rate of return. Alternative finance platforms still have some way to go when it comes to securing consumer confidence, and brands should focus on this as a matter of priority.

Good service but high fees
To discover more detail about consumer concerns, we analysed the major keywords that comprised positive and negative sentiment for each platform.
For Zopa, negative sentiment largely revolved around the issues of bad debt and taxes.

Positive sentiment, on the other hand, consisted of a more vague set of keywords such as ‘Zopa thanks’ and ‘pretty good’, suggesting satisfaction with the platform’s services.

In this case, negative sentiment commonly related to the keywords ‘higher rates’, and ‘risk’, suggesting significant consumer concern here. The appearance of keywords for other platforms suggests consumers may be weighing up their options.  

Similar to Zopa, positive sentiment around RateSetter again revolved around keywords suggesting satisfaction with the platform’s performance and services, such as ‘Big thanks RateSetter’, and ‘Getting the car’.

Funding Circle
Lastly, users of Funding Circle again highlighted negative keywords in relation to ‘bad debt’, ‘risk’ and ‘higher rates’.

On the positive side, consumers expressed satisfaction and thanks for the platform’s services. A positive keyword that stood out for Funding Circle was references to ‘Great British businesses’. Neither RateSetter or Zopa contained any mention of this, suggesting that Funding Circle has gained an edge among UK consumers in branding itself as a homegrown alternative finance platform.

To learn more about online financial trends in the UK, check out our report Analysing eCommerce in the UK.


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