The Rise of P2P Lending Software: What Investors Should Know

If you're an investor and a little worrisome about spending money on your own loan management software, then get the right team to create a customized system. In this article, we'll dig deeper into what P2P lending is, how P2P lending software works, and what are the things P2P lending investors should know.

Understanding P2P Lending Software

P2P lending is a financial transaction in that an investor lends directly their money to borrowers without the intermediation of a formal banking institution or lending company. Peer-to-peer or P2P is a person-to-person interaction with the help of a platform or website.

P2P lending is a new way of borrowing and lending money. P2P lending is a possible alternative to banks, credit unions, or other traditional financial institutions. The main difference between P2P lending and conventional financing is that the lender and borrower are total strangers.

In the case of online lending, P2P is also known as "social lending" or "crowd lending" because P2P lending platforms connect the borrowers directly with the investors. Each P2P software determines the interest rates, payment plans, and lending policies helpful for investors and borrowers.

AS a P2P investor, it's considerable to know what you should do first to develop a P2P software solution for your business. These include the peer-to-peer lending ecosystem and the advantages of having a P2P lending software solution for your lending business.

Some of the Popular Peer-to-peer (P2P) lending platforms in the market today are Peerform and UpStart.

Peerform

Peerform is a lending platform in which algorithms grade applicants with more credibility. It provides bowers with negative credit an alternative way to apply for high-interest payday loans and other loan products. Peerform rates are:

Lowest Rate: 2.99%
Annual Percentage Rate: 5.99%-29.99%
Loan Amount: $4,000-$5,000
Loan Terms: Maximum of 3 years
Origination Fee: 1%-5%
Late Fee: 5% ($15 minimum)
Minimum Recommended Score: 600

UpStart

Upstart is a P2P lending platform that caters to borrowers even with bad credit according to their academic and employment status. However, they will need to have at least a 600 credit score for quality. Their rates are one of the lowest in the market such as:

Lowest Rate: 2.99%
Annual Percentage Rate: 8.94%-35.99%
Loan Amount: $1,000-$50,000
Loan Terms: Maximum of 3 years to 5 years
Origination Fee: 0%-8%
Late Fee: 5% ($15 minimum)
Minimum Recommended Score: 600

P2P Lending Software Development Ecosystem

The increasing need for P2P lending software among investors is prevalent. That's why you have to think of the necessary functions of your software. The most common P2P lending software ecosystem is divided into modules such as:

1. Client Identification Module

• Client identification protection
• video stream liveness detection
• Document recognition
• Document scanning and verification
• Financial monitoring and risk assessment
• Client digital signature

2. Score Module

• Credit scoring, reporting, and analytics
• Credit decision-making system for banks and MFIs
• Client identification scoring
• Customer credit reports from financial bureaus
• Artificial intelligence (AI) and machine learning (ML) for business decision-making
• API for client-base migration of payments, transfer fees, and other product transfers
• Automatic payout of funds
• Integration with 1C, ProFix, Lime systems, etc.

3. Bill Module

• Online payment system
• Integration with popular payment systems
• Availability of payments via terminals

4. CRM Module

• The complete record of application for credit products and history of interaction with the client
• Customized individual scripts based on customer’s concerns
• Customized action to be sent to clients
• Mass mailing triggered mailing, and the automatic generation of unique links of products, etc.

5. Sitekit Module

• Company website with borrower’s and lender’s dashboard
• Integration set up with lead/traffic generator
• SEO page construction

These are the common modules you can get from P2P lending software. Also, businesses can enhance their lending software by adding more functionalities as per their requirement with the help of lending software development firms. Do the changes according to the usefulness and complexities of the functionalities needed in your loan management software.

The basic principle in the loan management system still lies in your typical loan cycle. The difference is that you have control over how much you're willing to fund the borrower's application request and how many borrowers you're going to lend.

Advantages of P2P Lending System an Investor Should Know

Having a P2P loan management system is a better option than traditional credit products and bank services. Here, we discuss the advantages of using a peer-to-peer loan management system.

1. Secured and Safe. Encrypted system for security and safety of both borrowers and investors.
2. Higher ROI. A higher return to an investor without charges from a bank or financial institution serves as a middleman.
3. Faster Turn Around. Investors can conveniently disburse funds to serve borrowers better.
4. Better Risk Management. Reliable risk control makes a better assessment of a borrower's credit worthiness.
5. More flexible. Peer-to-peer lending is an unsecured loan. Thus, the borrower doesn't 'have to give collateral to back the loan. Without this barrier to entry, the application is quick and straightforward.

Know how Hexaview – a leading FinTech Software Development Company can help you with your P2P lending software development that works to your advantage. Ask an appointment schedule to our Hexaview Team at [email protected].