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The Growth of P2P Lending Platforms – Will it Continue in 2023?

Peer-to-peer (P2P) lending platforms are upending the traditional banking sector by putting investors and borrowers in direct contact. In a survey by Grand View Research, the trend is expected to rise at a rate of 19.5% by 2027, indicating that it is becoming more popular across the globe.

This article will examine the development of P2P lending platforms, the advantages they provide to investors and borrowers alike, as well as the difficulties they encounter.

Peer-to-Peer Lending: What is it?

Peer-to-peer lending, sometimes referred to as social lending or marketplace lending, is a type of funding that uses an internet platform to link borrowers with private investors. Platforms for peer-to-peer lending serve as middlemen, making it easier to match borrowers and investors based on their individual credit histories, loan amounts, and interest rate requirements.

P2P lending platforms use money from individual investors who want to earn larger returns on their investments than traditional savings accounts or fixed deposits, in contrast to traditional banks that rely on deposits to make loans. P2P lending systems provide reasonable interest rates and fees, speedy loan disbursements, and customizable terms to create a win-win situation for both investors and borrowers.

P2P Lending Platform Development

Over the past ten years, the P2P lending business has expanded dramatically due to changes in consumer behavior, technology improvements, and the growing need for nontraditional finance solutions. Transparency Market Research estimates that the size of the worldwide P2P lending market was USD 67.93 billion in 2020 and is projected to increase at a CAGR of 29.7% from 2021 to 2028.

P2P Lending Platforms' Challenges

P2P lending platforms provide a number of advantages, but they also have a number of difficulties, such as:

  • Credit danger: P2P lending services run the danger of borrowers defaulting, which might cost investors their investment cash.