P2P lending services are the future of the financial services market
Over the past 10 years, the process of a loan obtaining has changed dramatically. If earlier money for business development was given only by banks, today entrepreneurs have access to other formats. In particular, p2p lending services. Now the volume of this market approach to 119 billion dollars.
What was the process of obtaining a loan before
Let’s back in the early 2000s and imagine yourself in the shoes of a businessman who needs to get a cash loan. At that time, he had nothing but to go to the bank and take out a loan. However, financial institutions did not issue them to everyone, relying on their selection criteria.
Having been refused, the entrepreneur said goodbye to the idea of starting a business or scaling it.
Everything changed after 2008. Then the whole world was under the impact of the global financial crisis. The old lending formats were soon replaced by new ones. One of them was p2p lending services.
What is P2P lending
P2P lending (or peer-to-peer lending, crowdlending) is a loan without intermediaries, which most often are banks. Such services appeared a couple of years before the unfortunate 2008 (Zopa in Britain, Prosper in the USA), but became popular after it.
The global financial crisis has changed people’s attitude to banks. When the largest of them (Lehman Brothers, Bear Stearns) went bankrupt or were resold as a result of the collapse, confidence in banks declined, which led to a general decline in the volume of traditional loans.
However, the demand for loans has not disappeared. And then people began to pay attention to P2P lending services. By 2014, the market for such services was estimated at $ 9 billion.
The advantages of crowdlending
Waiting for approval of a loan application at the bank often takes more than a month. Since crowdlending is an automated service, you can spend a couple of minutes on all procedures here.
2) High chances
Getting a bank loan is often like playing roulette. It may seem that the chances of a loan are high, but in the end you get a refusal. The institution makes choices based on its criteria, patterns and standards.
All this is absent in the work of P2P services. Even a person with not the best credit history can get money here.
In our time, the less the physical presence of a person is needed for the transaction, the better.
To obtain a bank loan, it is first necessary to collect a folder of documents, come to the branch, sit in line and hope that the income statement will convince the manager to give you a loan. It is also possible that it would be necessary to come to the bank more than once.
In case of P2P lending, the process often takes place online. In addition, unlike banks, it is enough to provide only one document confirming the identity.
Current state of the peer-to-peer lending market
In the summer of 2018, financial experts predicted that by the end of the year P2P field will reach $ 119 billion.
American companies specializing in this type of lending have already reached a high turnover. In the portfolio of Lending Club there are more than 35 billion dollars of p2p loans, in Prosper Funding — 8 billion.
In Russia, such services also develop. Among the leaders of the platform are Alpha Potok, StartTrack and ModulDengi. The total volume of Russian peer-to-peer lending market in 2017 was $ 11 million. It is expected that in 2018 it will grow more than 2 times.
The future of P2P lending services
Analysts assume that P2P market will show good results every year. By 2025, it could reach a trillion dollars. In Russia, experts expect figures of 113 million.
This will be possible thanks to the increasing competition between banks and new services, which in this struggle will certainly gain up. P2P lending services have more accessible and accurate array of user data than traditional banks. Because they use Google, Facebook and other platforms in their work.
Also, among the companies that provide crowdlending services, a database is being created, which will be analyzed by the neural network. It will be able to choose candidates for the loan with the lowest percentage of risk. Also their decentralization will give an easy win to such organizations. Unlike banks, which “collect” the risk of default on their balance and are forced to be under the control of the state, P2P services are often private and independent investors.
In general, the forecast regarding the new market is extremely positive. The future of lending is in companies like Alfa–Potok, Zopa and Lending Club not banks.