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Peer-To-Peer Needs Peer Evaluations

John Gaffney |

The peer-to-peer whispers are becoming audible conversations. As venture capital money floods into bilateral arrangements for everything from sharing apartments to personal payments, merchants and banks need to consider a quiet voice in the dialogue: the consumer. Because P2P payments will require sharp consumer preference and segmentation as they gain a louder voice in the payments conversation.

In order to gauge how loud it will get, let’s look at some staggering venture capital numbers that have moved peer-to-peer start-ups out of whisperdom. As complied by noted strategist and WSJ columnist Jeremiah Owyang, the total VC funding for P2P start-ups in the month of April alone topped $852 million. That’s $28 million a day. If you want to get micro, it’s $2 million an hour.

They range from P2P transportation company Lyft to gifting app Yerdle. And among those April winners: Lending Club, which has notched $3.8 billion in peer-to-peer loans since 2007. It is just one of the P2P lending start-ups that are more compatible with the current banking systems than P2P payments. The established players are all part of the payments landscape, and it will be interesting to see if the technology and the funding activity can translate into consumer traction. If April is any indication, the P2P economy start-ups will be funded at social media levels. If consumers buy in, the infrastructure will be there from the establishment and the disruptors. And if May is any indication, the digital marketing ecosystem is becoming dominated by start-ups and new products at a rate unseen since the glory days of the late ’90s—the dot-com boom.

As Internet Week unfolded in New York City during the week of May 19th, the stream of start-up announcements (not just funding) came at a dizzying pace. Microsoft bowed the Surface 3 on Tuesday, May 20. It was one of 13 new products announced that day. And that was by 1p.m. EDT. You couldn’t blame anyone at Internet Week’s endless conferences, hackathons and beer fests for partying like it was 1999.

This P2P trend goes far beyond Bitcoin. And it’s all exciting to watch if you’re an observer. The participants, however, need to be considered. The participants are consumers; and in order to integrate them into peer-to-peer strategy discussions banks and merchants will have to go a bit “old school.” They will have to go back to a strategy that dominated Internet Week three years ago, and that means leveraging the data and analytics solutions connecting to the consumer’s journey.

Banks haven’t yet lost many customers to P2P payment, nor have lending firms, whose  category includes mobile apps (as Insights pointed out in March). Sample your current consumer base and you won’t find much about peer-to-peer payment intent or affinity. It’s untested in a time that demands reliability in finance. Consumer journey analytics will show how (and if) consumers will approach peer-to-peer applications and products, including payments. It will show how they gather information about the technology and the possibilities. Consider the consumer; once you do, the hype is informed by a practical, fact-based business perspective.

 

Topics: Payments Strategy

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