What does peer-to-peer (P2P) lending mean?
With the growing recognition of internet communities since past decade an up-to-date method of instigating the loan has arrived within credit market called peer-to-peer (P2P) lending. Therefore, peer to peer has also been acknowledged as a social lending or crowd lending. Furthermore, in such type of loan lending model intervention of any financial organization is not obligatory. Moreover, assessment procedure of the loan instigation is given into the hands of remote lenders as well as debtors, also websites like Prosper.com offers them with a platform for implicating with each other. Nowadays, under such platforms debtors generally label the purpose of their loan application accompanied by the information associated with their existing financial situation, including salary slips and open credit positions, depending upon which the lenders approve the loan.
From the borrowers perspective P2P lending is a method of attaining loan without the participation of financial institution in the decision making process, also there is a probability of receiving a loan in better setting than in a dated banking arrangement. With regards to the moneylenders it is observed as an investment approach where the risk of investment is coupled with the credit rating of the loans financed. In addition, platform itself frequently benefits by levitation expenses for efficient documented transactions.
As, peer-to-peer lending market is a very small section of any financial market that includes numerous governing restrictions in diverse regions. The regulations actually rely upon the nation’s strategies, together with the original banks as partners in operative business is typically a major concern. The regulatory procedure also includes confirmation of borrower’s information by the credit agencies or any other exterior monitoring bureaus. On the other hand, this approach towards the authentication as well as papers differs depending upon the country’s guidelines.
Prosper, The U.S established P2P lending establishment has got 2 million plus members having the overall lending at around $6 billion. Zopa, a UK established P2P lending establishment had supported an overall £1.4 billion plus P2P loans as well as presently has round about 60,000 investors loaning to its debtor’s base that amounts to some lacs. Many companies alike Zopa & Prosper have magnificently launched their own covered market.
Additionally, peer-to-peer lending market has by now witnessed a number of positive outcomes along with a huge impression over the finance segment, nevertheless, there are no chances that the growth of the market is going to slow down anytime in next few years. Furthermore, technological advances, incessant innovations and supportive guidelines is estimated to impel the business across the world to startling levels, in addition constantly altering the way we infer the finance & lending procedure.
So, what’s the peer-to-peer lending overview?
One of the major factors predictable of driving the growth of global peer-to-peer lending market in forthcoming years is growing developing markets on account of improvement in knowledge of lending at marketplace, improved limpidity for investment as well as slashed rates of interest to consumers. The global Peer to Peer Lending Market size is foreseen to grow to USD 820.70 billion by the end of 2025.
What about the peer to peer lending market segments?
The global market for peer to peer lending has been segmented by different business models, end-users and geography. On the basis of types the market has been further bifurcated into Consumer Lending and Business Lending. In the year 2017, consumer lending dominated the overall peer to peer lending market by occupying a 72.2% share.
Geographical segmentation of the international peer-to-peer lending market is fragmented across several key regions covering North America, Europe, Asia-Pacific, Central & South America and Middle East & Africa. Besides, as per the analysis of past few years, Asia-pacific dominated the market in 2017 and China held the maximum share.
Who are the market Leaders?
Some of the prominent players operating in the competitive edge of the peer-to-peer lending market across the globe include Prosper Marketplace, Funding Circle, Zopa, Lending Club, RateSetter, China Rapid Finance, SoFi, PPDAI Group, Upstart, and Funding Societies.