No. 27 - Adam Fish and John Carter McKnight: The financialization of peer-to-peer lending in the United Kingdom

Recently, peer-to-peer (“p2p”) lending systems have emerged as popular vehicles for unsecured consumer and small-business lending (Nesta, 2014). P2p lending is an innovation distinct from the better-known crowdfunding: where crowdfunding systems operate as a mixture of charitable donation and pre-purchase (providing funds for a product early in its development stage rather than after product completion), p2p lending involves the exchange of funds at commercial rates of interest, competing largely in the personal-investment market on price, by “disintermediating” banks with their relatively high overhead costs. P2p firms, unlike banks or savings and loans, do not originate loans themselves: they act as a marketplace matching “buyers” of debt (borrowers) with “sellers” of debt (investors). Some scholars claim that p2p lending is transforming the powerful position held by banks, returning that power to distributed, collaborating people (Bauwens, 2005). Others, however, see p2p lending as coopted into the process of financialization, leaving the more radically decentralizing aspects aside (Aitken, 2015). While a variety of architectures and business models can be found within the p2p financial sector, the term “p2p” has shifted over the past decade, away from associations with high technological literacy, risk-taking, playfulness, and innovation, to associations with “fairness,” and a construction of borrowers and lenders as “peers” by virtue of being financially “sensible,” while the underlying p2p infrastructure, both technological and financial, is elided or ignored.

We engaged in a 15-month study of Zopa Limited, the earliest and largest (by transaction volume) UK p2p lending firm. Zopa was the subject of sociological analysis in 2006, the firm’s second year of operation (Hulme, 2006), which included an extensive series of interviews with senior management and employees, observation of work processes, brainstorming sessions, and promotional product development. We chose Zopa in order to examine how the firm and the p2p industry had responded to the global financial crisis of the late 2000s. As Zopa was and remained a reflexive and data-driven firm, we expected it would provide significant information about the evolution of its business model, communications, and technological processes.

About the authors

Adam Fish
Adam Fish is a cultural anthropologist, video producer, and Scientia Fellow at the University of New South Wales who investigates power in cultures of digital production. In 2018, he was ZeMKI Visiting Research Fellow at the University of Bremen. His book Technoliberalism (Palgrave Macmillan, 2017) describes his ethnographic research on the politics of internet and television convergence in Hollywood and Silicon Valley. His co-authored book Hacker States (MIT Press, 2020, with Luca Follis) is about how state hacking impacts democracy. His co-authored book After the Internet (Polity, 2017, with Ramesh Srinivasan) reimagines the internet from the perspective of grassroots activists, citizens, and hackers on the margins of political and economic power.

John Carter McKnight
John Carter McKnight is Assistant Professor at the Harrisburg University of Science and Technology. His work examines the assertion and maintenance of collective identities – national, ethnic, and gender – via affective rhetorics and communications technology design. It is rooted in user-centric STS, post-phenomenological approaches to communications technologies (drawing in particular on the work of Ihde and Verbeek), affect theory (including Wetherell, Sedgwick, and Ahmed), and new theoretical work in the rhetorics of experience architecture being developed by Potts and others.