Peer-to-Peer Lending in New Zealand Sees Renewed Momentum

Peer-to-peer lending in New Zealand is experiencing a resurgence, with two key players marking significant milestones. Lending Crowd has announced its reopening to borrowers after a temporary closure, while newcomer Go Lend surpassed its first-year investment targets.

Initially launched in New Zealand in 2014, peer-to-peer lending was heralded as a transformative approach to finance. It aimed to connect individuals wanting to borrow with those looking to invest, effectively bypassing traditional banks. By 2016, the Financial Markets Authority (FMA) had licensed five peer-to-peer services, increasing to eight by 2017, with over 20,000 registered investors. However, the sector faced challenges, leading to the closure of the first peer-to-peer lender, Harmoney, in 2020, and the exit of Lending Crowd in 2023.

The landscape is shifting, signaling a potential revival in peer-to-peer lending. Wayne Croad, managing director of Lending Crowd, noted that the platform’s relaunch comes at a time of significant regulatory changes, including the introduction of the Depositor Compensation Scheme and the upcoming open banking framework. Croad emphasized the government’s commitment to fostering competition and innovation among non-bank lenders, stating, “We wish to take advantage of open banking systems as they finally roll out in New Zealand.”

While Lending Crowd’s platform is currently focused on borrowers seeking alternative financing, it plans to welcome retail investors in the coming months. New products, including first mortgages, are in development to attract investors looking for competitive returns. Croad mentioned that this approach aims to align risks and rewards between the platform and its investors, fostering greater confidence.

The renewed interest in peer-to-peer lending also reflects broader shifts in investment behavior. With interest rates decreasing, many investors are seeking better returns, making peer-to-peer options increasingly attractive. Croad highlighted that despite a mixed record in New Zealand, the market has matured, and the hybrid, high-tech approach of Lending Crowd is drawing interest from returning investors.

On the other hand, Go Lend, which focuses on property-secured loans rather than consumer lending, has also experienced notable success. Luke Jackson, CEO of Go Lend, reported that the platform has exceeded its first-year targets, achieving over $15 million in investments and acquiring more than 400 customers since its launch in December 2024. Jackson stated, “Our platform allows investors to participate in property-secured loans with solid, fixed returns,” emphasizing the unique feature of allowing retail investors to buy loan portions as small as $1,000.

The shift from unsecured consumer loans to secured property loans marks a significant evolution in peer-to-peer lending. Jackson noted that many former consumer lenders have moved away from the peer-to-peer model, suggesting a clear demand for secure investment opportunities. He believes that peer-to-peer lending is a suitable structure for short-term property financing, especially given the current market dynamics.

Looking ahead, Jackson expressed optimism regarding the property market, suggesting a potential upswing in activity that could create more lending opportunities. “We are feeling positive about the outlook, and with our current growth trajectory, we forecast reaching between 1,500 and 2,000 customers in the next 12 months,” he stated.

Currently, of the eight licensed peer-to-peer lenders on the FMA’s register, only three others remain active: Squirrel, Southern Cross Partners, and Zagga. Squirrel, which has operated in the peer-to-peer space since 2015, primarily functions as a mortgage broker and non-bank lender. According to John Bolton, the company’s founder, Squirrel currently manages over $500 million of investor funds and originated nearly $650 million in loans through its peer-to-peer platform last year.

Despite the recent momentum, Bolton expressed skepticism about a new wave of peer-to-peer lenders emerging in New Zealand. He pointed to the market’s limited size, high establishment costs, and stringent regulatory environment as barriers to scalability. However, he acknowledged the growing importance of decentralized finance (DeFi) as a future trend, noting that peer-to-peer lending represents an early iteration of this evolving financial landscape.

As New Zealand’s peer-to-peer lending market navigates these changes, both established and new players are positioning themselves to capitalize on fresh opportunities, aiming to meet the evolving demands of investors and borrowers alike.