Firing line  

Technology is changing business models and creating threats

“We have 20 years of working with advisers and it is really taking that combined corporate knowledge and applying it to a high growth area and making it suitable for advisers.”

Since entering the P2P sector, Mr Handfield-Jones said that nearly 1,000 advisers have registered on the platform, while almost £270m of loans have been funded by investors.

“We talk to advisers about how P2P fits into their portfolio structure and asset allocation process,” he added.

“What it offers is a low volatility yield in an environment where yield is hard to come by and volatility metrics are creeping up. It’s a better yield than cash and you are not exposed to the volatility of the stock market.”

According to Mr Handfield-Jones, the demand from investors for these types of loans has been driven by the rate pressure on Isas, challenges faced by property investors and a desire to help those who are in the decumulation phase of retirement.

Tax changes mean that stamp duty is quite punitive when buying a second property, and as a result, buy-to-let investors are not able to offset all the interest on a mortgage against the rental income.

He added: “It is looking much less efficient. If the market grows at below 2 per cent, you can end up effectively with a 0 per cent rate of return.

“To get a diversified portfolio of property loans, backed by bricks and mortar, is quite an appealing notion for those who would have been a casual landlord but don’t want to deal with the hassle of it, and with the tax changes it become less financially viable.”

Another area that Mr Handfield-Jones said advisers are looking for help is with cash investments.

So it launched an offering called Octopus Cash designed to give clients a better rate on their savings, while making sure they are covered by the Financial Services Compensation Scheme (FSCS).

Octopus Investments works with a number of smaller banks who, it claims, offer some of the best savings rates around.

Looking ahead Mr Handfield-Jones said the Lab, which is now 100-strong, is continually looking at new products to develop as technology becomes a critical part of the financial services sector.

He added: “Technology is totally changing business models and creating massive threats, but also massive opportunities. Wealth management, financial advice, asset management; these industries are not immune from changes.”

Ima Jackson-Obot is a features writer at Financial Adviser