Omprakash Banerjee, Omprakash Banerjee impact,p2p,lending,traditional,services

Impact of P2P Lending on Traditional Services in General


Impact of P2P Lending on Traditional Services


Impact of P2P Lending on Traditional Services

They say a problem well defined is half solved. Hence, let’s explore what this P2P lending (P2PL) is all about at the first place for an understanding of its impact on the traditional a.k.a. the conventional services.

What is P2PL lending?

Well, P2PL stands for peer to peer lending. It essentially involves money lending to some unrelated people (also known as peers) without the support of the traditional intermediaries such as the financial institutions and the banks. This P2PL model operates through the online transfer of money from a P2P company to an individual. The P2PL is also known as the crowd lending.

P2PL is, however, different from that of the peer to peer investing (P2PI) and it works on the parameters like the credit checking tools and the different lending platforms.

Key areas of P2PL:   

  • Unsecured loan: Unlike the secured loans, no security deposit or mortgage is required as a collateral for availing the P2PL. That’s why P2PL is termed as an unsecured loan issued to a borrower.
  • Individual lending: Here, the borrowing community usually constitutes individuals rather than a company. This, however, doesn’t deter the scope of P2PL’s work since it offers a gamut of loans befitting the individual needs. For instance, student loans, leasing loans, and payday loans too are available alongside others.  
  • Saleable to a third party: It is, however, important to mention here that the P2PL itself is treated as a security that can be sold to a third party in the market. A P2PL can, therefore, be treated as an alternative financial service.

According to a research conducted by the Morgan Stanley, the P2PL will hit $22 billion mark by 2020 in Australia. Zopa, a UK based company, specialises in P2PL. You can either borrow money from Zopa or can lend your money to it for the good returns. That’s the catch.