Government policies have a huge influence on everyday life — both positively and negatively — and even more so for enterprises operating in the industries directly related to these policies. For the burgeoning peer-to-peer platform that is online lending, a decision by the U.K. government has given a major boost to an industry that’s recently been experiencing its first significant period of turmoil.

In April, the U.K. government launched the Innovative Finance Savings Account (IFSA), which, according to a report from Business Insider Intelligence, “allows UK consumers to invest up to £15,000 ($20,000) in alternative finance platforms and get tax free returns.” Options open to U.K. consumers include peer-to-peer (P2P) platforms.

Significant Increase in P2P Platforms

According to the data, the government’s new IFSA has resulted in “a significant uptick in business” for peer-to-peer lenders that have been approved by the Financial Conduct Authority (FCA). One of those approved is Crowd2Fund, a P2P lender specializing in lending to small businesses, which has seen a 667 percent increase in funds added to the system and a 373 percent increase in new investor registrations.

Crowdstacker, a relatively new P2P lender which also focuses on loans to businesses, saw investment via the platform almost double due to the launch of IFSAs. While the U.K. government should be commended for its initiative, regulatory holdups at the FCA have limited the impact of these new policies, highlighting the need for a coordinated approach on the part of government departments when implementing such initiatives.

Overcoming Obstacles

Back in May, the P2P lending world took a hit when the CEO of the biggest name in the industry — LendingClub — resigned amid an internal investigation into a botched loan. In the wake of this scandal, along with the turmoil in the wider markets, investors became spooked. As a result, online lending to U.S. consumers tumbled 34 percent in the second quarter of the year compared to the first three months of 2016, according to data from Orchard Platform.

The Chinese government also recently published proposed legislation to curb the operations of P2P lenders. However, rather than trying to stop growth in this area, they’re seeking to prevent fraud, which will benefit everyone in the long term.

Despite these recent setbacks, government support can significantly benefit many industries. Whether it’s virtual reality training for the military, making software open source or helping build smart cities, governments that encourage the use of technology in innovative ways can help drive economic growth.

Government organizations are increasingly taking advantage of new technology breakthroughs and trends by looking to crowdsourcing as a way to spur innovation and decrease costs.