Peer-to-peer (P2P) lending is increasingly becoming popular in India as an alternative to traditional lending methods. With around 1.7 billion adults remaining unbanked in the global economy, P2P lending has emerged as a viable alternative for borrowers and lenders, where individuals as lenders raise loans that are paid back with interest by the borrower. Technological innovations have undoubtedly contributed to its adoption, making digital technology the spine of any P2P lending platform.
Growing Market Size of P2P Lending
According to a report by Acumen Research and Consulting, P2P Lending is set to garner a market size of $804.2 Billion by 2030 growing at a CAGR of 29.1 per cent from 2022 to 2030.
Three T’s of P2P Lending: Trust, Transparency, and Technology
One of the key challenges that the P2P ecosystem is met with is the lack of information and transparency. Unlike banks and other traditional financial institutions, P2P platforms are essentially tech companies acting as aggregators for lenders and borrowers. To tackle this issue, several platforms have come up with offerings to make the P2P lending ecosystem more transparent. Measures such as creating a database and providing investors with detailed information about the loans they are investing in, including the borrower’s credit score, income, and other relevant financial information, help create trust. Also, since technology can help platforms secure real-time data and analytics, it can generate greater transparency and visibility into the lending process.
Democratizing Credit Access Using Technology
P2P platforms have the potential to leverage IndiaStack tools and protocols, such as OCEN, ONDC, as well as AA, to help foster seamless and effective execution of user experience. These advancements will make transactions faster, fairer, and more secure in the years to come.
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