Value Nomad

February 17, 2020

Can the P2P Lending Industry Disrupt Global Finance?

A hot topic around here is whether the p2p lending industry can disrupt global finance. Let’s take a look.

Technology is reshaping global finance and opening up access to credit for people outside the strict bounds of the financial industry. The p2p lending industry is leading the charge in disrupting traditional financing models. So can the p2p lending industry disrupt global finance?

In less than a decade, the P2P lending industry has grown to over $15 billion of market worth. Lending platforms connect borrowers and lenders directly eliminating the middle player. Borrowers can access cheaper loans without suffering the pains experienced when borrowing from banks.

p2p lending industry

Borrowers enjoy faster loan approvals and fair loan repayment terms. This makes P2P lending platforms more appealing even to marginalized sectors.

Top Countries Leading the P2P Lending Industry

Financial technology forms the backbone of the P2P lending industry. Countries with developed FinTech tend to be leaders in the industry.

In the U.S. for example, the peer-to-peer lending industry is worth over $2 billion and growing at an annual rate of 32.5%.

Some companies leading the adoption of the P2P lending market in the US include Funding Circle, Upstart, Lending Circle, Prosper Marketplace among others. These companies facilitate lending for a variety of projects including credit card debt consolidation, refinancing, business finance, home loans among others.

The U.K. is another country leading the charge in the P2P lending industry. By June 2019, the top five players in the country had £8,620.5 million ($11,223.98 million) total loan value.

Others include countries in the European Union such as Estonia, Finland among others.

P2P – Revolutionizing Small Business Financing

The P2P industry is especially vibrant in small business financing. Many small and mid-sized businesses face funding challenges, with banks requiring near-perfect credit scores to advance loans. P2P platforms, however, demand less, making it easy for small businesses to receive crucial funds.

One of the largest lending platforms, Funding Circle, focuses only on lending to small businesses. It leverages crowdfunding to source funds for small businesses.

Other application areas include personal loans, vehicle loan financing, real estate financing among others. The p2p industry is not only changing the financial landscape but also promoting financial inclusion.

P2P Lending Industry Outlook

Given the improved internet penetration across the world, the P2P industry is poised to rise as it relies on technology to grow. Further, areas with low bank penetration seem more attractive to users of the lending platforms.

It’s estimated that the market will grow at 19% CAGR between 2018 and 2024, reaching $44 billion by 2024. The increasing number of borrowers and greater awareness in the market will drive the growth.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Exit Popup for Wordpress