Will P2P Lending and P2P Technologies Come Together?

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If you ask most people on the street what P2P stand for, they’ll say, “peer-to-peer.” But if you ask someone in procurement or accounts payable, they’ll say, “purchase-to-pay.”

But will this distinction even matter in the future? I believe the two are poised to come together, in part, when it comes to the need for better information to drive the business lending, payables financing and receivables financing markets.

If you believe the headlines, such as P2P business lending to eclipse consumer sector, in the Financial Times, peer-to-peer business lending is set to take off. This lending format, where individuals or non-bank entities loan money directly to others in the business sector, is set to eclipse similar consumer-type loans.

“Cumulative P2P consumer lending stood at £1.583 billion, while lending to small and medium-sized businesses totalled £1.581 billion as of June 16, according to the AltFi Liberum Volume Index,” the FT observes.

These “marketplace lenders” act as intermediary platforms that do not carry loans on their balance sheets, the articles notes, but serve as a venue for transaction and information, such as credit checks, for financing participants.

Peer-to-peer lending is not (yet) to be confused with other types of trade financing programs that leverage an approved invoice or other documents as a financing mechanism through purchase-to-pay (P2P) platforms such as Taulia, Tungsten, C2FO, Basware, Ariba/SAP and others, even ones in which a non-bank third-party is providing the capital.

Yet the value of the trade documentation to reduce payment risk in a short-term, revolving lending situation, combined with capital sourced from potentially limitless third-parties, is a no-brainer and a complement to the typically longer-term loans offered on peer-to-peer lending sites today. Moreover, the longer-term value of this type of systems-based documentation and trending, such as invoice approval trending for a supplier, could likely complement the risk-scoring for medium and longer-term loans and facilities.

The only question I have is: When will P2P and P2P come together?

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Voices (3)

  1. Neville Calvert:

    The number of sites facilitating P2P are growing on a global basis as FinTech solutions develop and eveolve. It is interesting to note in the article by the FT mentioned, the role of -” ‘market lenders’ as transaction, data and credit checking -“. I wonder? Validation of counter party risk and surity of payment to the lender is, in many instances, a sigificant issue. The opportunity of fraud remains high. Collusion between buyer and seller is very real. There have been, are and will continue to be people trying to manipulate the market. FinTech developers need to focus on the surity of the documnetation flow and audit trail to enable greater confidence. P2P platforms offering investors alternative opportunities on a “caveat emptor” basis will need to rethink the whole security of payment strategy if they are not going to get caught in a scandle. Overall though, the loan and payments systems will continue to improve.

  2. john dough:

    As jonie mentioned above, there are many sites that offer p2p loans involving p2p technology. If I’m not mistaken, I think https://btcjam.com/ is actually the leader in this space right now. BitBond just got going I think? I have used BTCjam and they offer a wide variety of loans from users all across the world. The founders are Brazilian and I think they have done a large majority of funding there as well.

    It will be an interesting race to watch but both companies seem to be on the right track 🙂

  3. Jonathan88:

    I am pretty sure that 2015 will be the year of p2p. However I would even say that it will be the year of p2p lending with cryptocurrencies due to the fact that Bitcoin is definitely financial services breakthrough. Maybe it does not have much momentum in retail transactions now, but I still believe in its tech. It is becoming more and more common nowadays. We can even mention many businesses that exist around bitcoin. On http://www.bitbond.com for example you can lend money internationally which was very difficult for individuals before bitcoin existed. It also allows to earn higher interest rates than what your bank pays and that was the most appealing argument for me to start using the platform 😉

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