Is Asia ready to participate in P2P lending and payments?
Although P2P transactions are gaining traction in the UK and US, Asian P2P businesses are still in a nascent stage. November 08, 2012 | Durva LakhlaniWhen Zopa (UK) and Prosper (US) first launched their respective peer-to-peer (P2P) lending ventures, it took a while for the industry to warm to the new concept of P2P lending. However, the recent global financial crisis and a lack of trust in banks have helped P2P companies gain solid traction. Furthermore, banks have tightened lending activities while coming to terms with their on-and off-balance sheets and liquidity mismanagement. For 2012, P2P lending in UK is expected to cross the $320 million mark, while in the US, P2P ventures Lending Club and Prosper have lent a combined total of $960 million. Currently, the biggest players in P2P lending are Zopa, Funding Circle, Lending Club and Prosper. P2P currency trading is a relatively new trend, and is a viable option for expatriates or businesses who wish to convert currencies. Users are beginning to realise that such transactions conducted through banks can be costly due to highly unfavourable exchange rates and other charges. On the P2P platform, they can match currency conversion rates with other individuals and obtain more favourable rates. There is almost zero risk as money is generally kept by the service providers in separate accounts. Indeed, P2P payments are already quite established through PayPal and Visa. In the new age of money lending, P2P ventures boost efficiency rates. These businesses may be young and miniscule compared to banks, but pose potentially huge competition. Their proposition to solve a problem in a much easier and personalised way garners a lot of interest. This can be seen Lending Club’s 100% YoY growth in new loans. That said, P2P lending does face the risk of higher losses (the highest loss incurred by an investor at Prosper was 14.71%). However, investors generally know what they are getting into and in return expect more yields. Credit risk is also important for P2P lending. Primary ways to assess borrowers’ credit standing include credit scores as well a... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Innovation, Payments, Retail Banking, Technology & OperationsInnovation,Payments,retail,technology, Innovation,Payments,Retail Banking,Technology & Operations, Keywords:P2P Lending, Lending Club, Zopa, Prosper, Funding Circle, Paypal, Visa, SEC, Peer To Peer Finance Association, P2P Payments, JPMorgan, Wells Fargo, BofA, ClearXchange, Popmoney, Citigroup P2P Lending, Lending Club, Zopa, Prosper, Funding Circle, Paypal, Visa, SEC, Peer to Peer Finance Association, P2P Payments, JPMorgan, Wells Fargo, BofA, clearXchange, Popmoney, Citigroup
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