Almost two thirds (61%) of Britons have no idea what crowdfunding is, according to research by P2P lender, ArchOver.
As a result and not surprisingly, only 3% of all respondent savers ticked crowdfunding as a part of their savings portfolio from a list of alternative investment options.
However, after having Crowdfunding explained to them (see Notes to the Editors), 8% of respondents said they would consider lending, even if their company loan was unsecured. If the loan was further protected, by securing it against the assets of the borrower company, the percentage of respondents showing an investment interest jumped by 16 percentage points to 24%. When the asset security is additionally covered by reputable insurance, the cumulative positive response almost doubles to 43%.
The above shows that the British public is very cautious and risk averse with respect to their savings. This is further backed up by other important results in the ArchOver survey:
63% of participants selected only savings accounts as the place to invest their money, not opting for the additional options of equity shares, bonds or even property – this despite today’s very low interest rates.
A key reason for savers’ risk aversion is that savers are investing for their own and their children’s future security. 61% of participants invest for their retirement, their children or future home improvement. This is much higher than the 38% who said their savings were for the luxuries of life, like holidays, cars and boats.
39% of participants would not accept any return on their savings, however high, if this meant there was just a 1% of chance of losing their money. All these respondents would prefer a Government backed savings account offering 1.25%. The interest rate return would have to be in excess of 20% before the majority number of respondents said they would invest
Brian Basham, Executive Chairman of ArchOver, says: “The 2008 recession will soon become a distant memory, but it’s evident that the downturn has made the British public exceedingly risk averse and reluctant to take on higher yielding investments associated with a little more risk. While the majority of people save for their future security and protection, they are looking at very limited options to invest their money. Interest rates on savings accounts are at historic lows, much to the chagrin of informed savers, so it’s remarkable that people aren’t considering wider options.
“P2P lending is gradually becoming a relevant and important asset class. With innovations in FinTech, such as ArchOver’s ‘belt and braces’ secured and insured loans to investors, there is enough room to whet the cautious saver’s appetite for better deals on their investment. The appetite is, of course, obvious by the country’s growing willingness to invest in secure P2P loans. However, there is also a desperate need to educate savers on what crowdfunding has to offer.”