The Evolution Of P2P Lending

In the past four years, peer-to-peer business loaning has surely come a long way. By the end of this year, the entire industry will certainly be unrecognizable for the first fledging borrowers and investors. As the market continues to grow in recognition and popularity, it has had to expand significantly to cope with the new demand.

Back in the day (four to five years ago), the first generation of peer-to-peer platforms were viewed as confusing by many borrowers and lenders. It was also viewed as a difficult platform to use and one that required expertise and time. The industry was considered a niche. Its target audience was hesitant and uninformed to invest in it.

The Evolution Of P2P Lending

The Changing Attitudes of the Industry

For the past four years, the attitude of these platforms has changed substantially. This is especially true towards the banking industry. Initially, “alternative finance”, was a term that strictly meant offering alternative to banks as well as their services. In fact, one platform launched with the jingle “No thanks banks.”

Nonetheless, today, the general attitude towards the P2P lenders eventual competitors in funding small businesses has drastically changed. Rather than working in competition against banks, there is a noteworthy effort being able to closely work with banks. Today, platforms have started to work hand in hand with banks.

Peer-to-peer platforms did not loudly change only because of the convenience to finance borrowers. They also did so because of the return rates that were offered to lenders. Initially, platforms would and could be very vocal over the openhanded rates that they offered. Today, you will not find this anymore, anywhere. This is particularly because of the recent FCA regulation last year in April.

Investors Enjoying Greater Security

As investors continue to grow to understand much more about the high-risk level of every loan, coupled with the market expansion, security measures provided have equally improved drastically. In the earlier days, the first generation platforms heavily relied on personal guarantees from borrowers. Nonetheless, it was not long after before some other platforms started to embrace further protection.

Improving Customization and Accessibility in P2P Lending

The market continues to widen more and more every day. Peer-to-peer lending continues to become a household term. Consequently, platforms have started to provide different options so that they can be as inclusive as possible.

Today, a number of investment accounts are readily available. They automatically invest money in loans that match a certain criteria. For instance, funds that are put into Green Energy Income Account are usually invested into renewable energy projects that are live on the platform.

Very soon, lenders shall be able to build or create their own investment products as well as set their own parameters based on their personal preferences like value, time period or location. Initially, lenders needed to manually trawl through a loan catalogue and locate individual loans, which fully met their criteria.

Author Bio

Peter Monson is an accredited and celebrated financial analyst based in Chicago. He lives with his wife and two daughters. Find more information on P2P lending and much more on