Peer to Peer lending also referred to as ‘social lending’ is a new segment in the financial services sector which blends technology, innovation, and disruption to provide an improved lending experience for both the borrowers as well as the lenders. The P2P cloud platform acts as an intermediary where individual borrowers can meet lenders who have to pay the administration fee and additional charges for the extra services that they acquire from the platform. The much efficient and streamlined application process, quick funding, low interest rates, 24/7 access to the status makes the P2P lending a desirable option, in this era of digital transformation. The P2P players provide an online market place for loans by organizing the entire process from start to finish, including the screening of loan applications and risk evaluation of borrowers. Read our Whitepaper ‘The Peer to Peer Marketplace’
The three key phases of the P2P platform includes the loan application and credit evaluation, investor funding and loan repayment. The loan seekers need to access the platform and fill in the application form which already holds the registered accounts of investors. The P2P Company evaluates the applications and does the credit worthiness evaluation by analyzing the traditional credit scores of the applicant. The main objective of this screening process is to rule out ineligible loan applicants. Big data analytics play a key role in this screening phase. After screening a credit bucket is assigned to the approved loan requests. Based on this credit bucket the interest rates and risk levels are decided. The interest rate will be fixed based on the cost of capital and the platform usage charges. If the borrower agrees to the loan terms and interest rates the platform uploads the borrower’s profile including credit score, assigned interest rates, and loan purpose. The investors can view the loan applications and take decisions on investing in one or more than one loans as full funding or partial funding. The interest rated provided to investors also accounts the commission payable to the platform in a one-time payment model or the partial payment at the time of monthly loan repayment. During the third and final phase, platform collects and transfers the repayment to the investors after deducting the commission, if applicable. In another scenario, borrowers can directly meet the investor based on the mutual agreement between them, where the platform doesn’t play a role in the interest calculations. Read our blog on Disruption in lending space .
• Lower operational cost compared to traditional lending
• More choice and flexibility for investors to choose the funds and invest
• Easy access and user friendly portfolio management for both investors and borrowers
• Faster funding compared to traditional lending processes
Partnered with Cloud Lending, a global cloud infrastructure company, Happiest Minds brings in a suite of Disruptive Lending solutions which creates scalable platforms that are modularized for different aspects of the lending cycle. With the mix of a right platform, adaptability to market demands and a quick time to market we help our clients, foster innovation in the field of lending. Read more.