Saturday, 17 December 2020 7:35 PM

P2P lending, the new lending

'Peer to peer banking' or 'Citizen banking' is the new trend for 2021 according to the English science magazine New Scientist. These terms stand for lending or lending money, but not by banks, but by citizens among themselves, precisely without the intervention of banks or other large official lenders. Banks are therefore not getting richer, but private individuals are. Many consumers' confidence in banks has fallen drastically due to the economic crisis, as a result of which private initiatives to borrow money are coming to life and gaining popularity. For example, the Lending Club website has already lent $ 360 million to individuals and paid out $ 37 million in interest in the past two years. This website is not a bank, but a mediation site for ordinary citizens who can apply for a loan here. Other well-to-do citizens can provide the loan to them and earn money from the interest.

Despite the science magazine sees a lot of potential in P2P lending, there is a chance that people will not repay their loan. However, if this new form of banking were to be watertight, then this trend would have such an impact on banking and fundamentally change banking. The interest payments go straight to the masses instead of bank executive bonuses, and more money is going in the real economy with spreading risk among many individuals.


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