P2P Lending & Conventional Banking: A Complement or Competition?

What is P2P Lending?

Peer-to-peer (P2P) lending or crowdlending is a sort of debt financing that facilitates borrowing and lending money for the individuals without resorting to the intermediary services offered by an official financial institution. P2P lending eliminates the erstwhile existence of middleman from the loaning process. Categorised as a type of crowdfunding, P2P loans offer personal unsecured loans to individuals and small businesses intending to subscribe to educational loans, real estate loans, traditional personal loans, etc. P2P platforms provide a platform meant to match borrowers with lenders. Upon a successful matching, the parties (borrowers and lenders) decide on a rate of interest and the principal amount to be loaned. The P2P platform companies usually charge a fee to assist borrowers or lenders access or offer money. Online P2P lending is an emergent industry with the promising potential to cater to the customer base so far left underserved by the conventional financial institutions. Continue reading “P2P Lending & Conventional Banking: A Complement or Competition?”