Lending money has always been one of the oldest and most important of human traditions; after all, if nobody could rely on others to drum up large amounts of money or resources, most of human civilization would never have been developed in the first place. While lending is a constant in our history, the specific methods and tools that we rely on for lending purposes are constantly changing. In the 21st century, a tidal wave of digital disruption has rapidly upended the way that people borrow money from one another, with peer-to-peer lending being the latest innovation to beset the market.
Peer-to-peer lending could very well be the way of the future. Here’s an analysis of peer-to-peer lending, and why it’s set to take off.
Online services are here to help
There have always been people who desperately need money and there have always been others who have money and are willing to loan it out under the right conditions. Never has it been easy for these two groups to interact with one another, however, and countless business opportunities or academic initiatives never materialized because the lending stars simply didn’t align. These days, that’s beginning to slowly but surely change, and it’s all thanks to online services which are arriving at a breakneck pace to help lenders find those in desperate need of some financing.
Peer-to-peer lending is removing the middleman from lending by connecting borrowers directly to lenders over online services. Rather than involving a bank or other pesky middleman who will facilitate the transaction but charge a small fee, peer-to-peer lending, sometimes called P2P lending, aims to expedite the entire process by allowing borrowers receive funds directly from investors – sometimes, this even means multiple investors are involved at once!
P2P lending isn’t some small part of the market, either; according to one analysis, the P2P market will be worth a staggering $897 billion by 2024. This is because digital services rapidly expand access to economic opportunities which have previously only been available to the privileged few. With more people borrowing and spending more money than ever before, the immense amount of growth we’ll see from P2P services being spread across the globe is almost unprojectable.
This isn’t to say that traditional financial institutions like Highway Lending will be gone anytime soon; rather, existing financial institutions will likely adapt to P2P lending and attempt to master it themselves as time goes on. As a more democratic and transparent way of lending money, however, it will certainly disrupt existing market hierarchies and force big banks to consider offering lenders and borrowers alike better terms when attempting to bring the two together.
P2P lending is thus going to be an incredibly attractive option to most consumers as time goes on, especially when it comes to forcing banks to draw up better terms when facilitating the lending process. With more direct lending and fewer logistical hurdles to clog up the process, peer-to-peer lending services are certain to become a pivotal part of tomorrow’s economy.