What is P2P lending?
Lending means giving credit to someone in a certain period of time and usually goes with interest. P2P stands for peer-to-peer, a concept where users in a network interact, share resources between one another without a centralised administrative system.
P2P lending is one of the 5 most developments in fintech (financial technology) including AI-based investing, blockchain, regtech and robo-advisors. Fintech provides an alternative to traditional finance where the role of intermediary or middle man like banks seems unnecessary.
In the case of P2P lending, as investors, now you are able to find an investment opportunities with yields up to 12% without the interference of the banks. If you are a borrower, now you have access to loans from your peers through a platform without going to banks, suffering loads of paperwork and assessment and finally they decline your loan application for some reason you have no idea of. That seems to be a common case. So here, the bank is the centralised administrative system, the middle man that we want to get rid of for our own sake.
P2P lending platforms provide a means for individual lenders and borrowers to meet their own needs in investing and getting funded, respectively. Retail bankers see P2P lending/digital lending as the biggest threat to their industry of all fintech developments mentioned above. (Visualcapitalist, 2017)