Fellow Finance to close its P2P lending business to become a bank
Finland’s Fellow Finance is following in Zopa’s footsteps, shutting down its P2P lending business to focus exclusively on a new banking operation.
The loan-based peer-to-peer crowdfunding and lending platform is merging with Evli Bank to create Fellow Bank.
Set to open as a new digitally-enabled lender in April, Fellow Finance will offer customers the option to sell their loan portfolios to Fellow Bank and open interest-bearing bank accounts and term deposit accounts as an alternative.
Fellow Finance has provided personal and corporate finance for over €900 million in Finland, Sweden, Denmark, Germany, Poland and the Czech Republic and has served over one million clients.
The companies say they will continue to manage active and current loan investments as normal and that the cessation of intermediation does not require any action by customers.
The Finnish company is following the same path as P2P lending pioneer Zopa, which in December announced plans to cut its lending business and buy out the retail portfolio as it focused entirely on its banking arm.
Zopa said customer confidence in P2P investing has been damaged by a small number of companies whose approach has resulted in significant losses for retail investors. He also cited changing regulations that have resulted in higher costs of doing business.