In a recent report by Transparency Market Research (TMR), the global peer-to-peer lending market is anticipated to witness a significant growth with owing to the increasing number if borrowers who seek funds for various personal purposes. Advancement in technology is allowing users to have an easy access to various interfaces offering quick updating, thus boosting the demand for peer-to-peer lending market.
Student population is increasing by the day. A majority of students seek loan at minimal interest rates and this is usually offered by the traditional money lenders. Low cost of operations is also expected to support the growth of the market as compared to rates offered by conventional money lending institutions.
Some of the leading players of the global peer-to-peer lending market are LendingClub Corporation, Funding Circle Limited, CommonBond Inc., Upstart Network Inc., and Social Finance Inc. The increase in number of small business are likely to offer more scope of growth for the global peer-to-peer lending market in the long run.
As per the TMR report, the global peer-to-peer lending market is estimated to exhibit a CAGR of 48.2% within the forecast period of 2016 to 2024 in order to reach a valuation of US$897.85 bn by 2024 approximately.
Technological Advancement and Money Lending Mobile Applications to Boost Market Growth
The continuous process of securing loans has made way for the global peer-to-peer lending market since it has taken care of the pain of looking for various ways of borrowing money. This is an important factor expected to boost the market demand as small businesses are more likely to opt for peer-to-peer option in order to solve their money lending and borrowing issue. Apart from small businesses, peer-to-peer lending service has also attracted all startups, hefty overheads, and entrepreneurs.
Another important factor expected to boost the peer-to-peer lending market revenue is amplified online interfaces and other such simplified modes where a key factor is advancement in technology. The borrowing party can get instant updates regarding the amount of fund that exists in his account, or when he seeks online funding, and also when any lending process is completed. This has made it simpler for end users to opt for the lending process, thus adding to the benefit of the market at a larger scale.
Besides, easy way of borrowing and lending funds through prediction software and other such advanced technologies are also anticipated to boost the market. Prediction software estimates the borrower’s economic capability to replay back the amount of loan based on various factors like annual income and others.
End Users Turning Towards Banks for Loans to Hinder Market Growth
Although the cheap rates that the lending market offers may attract a lot of end users, there may be a few factors restraining the overall growth of the market. These factors include the risk of borrowers turning away at the time when they have to pay back the money they took on lease. The market may also have to face loss when end users turn towards banks for loans. Banks as well as conventional leaders face huge pressure in order to improve their interest rates on savings. Additionally, loan repayment defaults may increase the risk of investors to get exposed and this is further forecasted to hamper the peer-to-peer lending market in the long run.
However, there can be strong growth opportunities in developing nations of India and China owing to their gigantic population base. Asia Pacific is likely to offer lucrative opportunities regarding rising loan requirement in the years to come.