P2P or Peer-to-peer lending is a system where individuals or businesses can lend to each other without any intermediary noted Bahaa Abdul Hussein. In conventional lending, the bank does the lending. P2P lending does away with any financial institution as intermediary. We look at the outlook for P2P lending in 2024.
P2P lending in 2024
The P2P lending market has been growing fast. The doing away of the intermediary has been a key feature of P2P. This factor has helped in making lending more affordable. Most importantly, it has made lending more accessible. Ordinary people with cash can now lend using a P2P platform. It has led to the democratisation of P2P lending.
In 2023, the market value of P2P was 143 billion dollars. It is estimated to reach 190 billion dollars by the end of 2024. The market is expected to grow at a CAGR of 32.5%. It is expected to touch 559 billion dollars by 2028. The pandemic has been a key contributor to the growth of P2P lending. The pandemic period saw the rapid growth of digital finance. P2P lending grew as a result of this.
Some of the key issues that have been driving the growth of P2P lending include:
- The increase in innovations in the finance sector driven by Fintech firms.
- Increase in adoption of digital finance, including digital banking by consumers.
- Development of new technologies that has helped in driving the growth of P2P lending.
- Low interest rates are offered by P2P lending, which is a significant factor contributing to its growth.
- Simple procedures that make it convenient for people to get loans on these platforms.
- Regulatory support has also played a key role in the growth of P2P lending.
- The growth of decentralized peer-to-peer lending mobile browsers.
- Intense competition among players has results in more innovations that has again contributed to overall growth.
Future outlook
P2P lending has transformed the way lending has been carried out. Getting a loan was a tough job and called for cumbersome procedures and a lot of paperwork. People with low credit scores were finding it almost impossible to get loans. The growth of P2P lending has increased accessibility to loans, and this is a trend that will continue.
Improved market penetration and more awareness of this form of lending ensures the outlook is bright. We can see P2P lending grow in popularity and help in improving financial inclusion. Addressing risks and compliance issues will help it grow better.
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