Nobody is sure if the Fintech sector will fully replace conventional banking, but one thing is certain: it’s here to stay. The old approach to finance management is becoming obsolete, as it’s not able to meet the evolving needs of consumers and businesses. What happened to bank deposits is simple proof that investors need solutions for faster money turnover and good returns. At the same time, individuals and SMEs need sources of financing that are more flexible and less bureaucratic. This is where alternative financing comes to play, and more specifically – Peer 2 Peer lending.
Building a bridge between investors and loan borrowers while benefitting both sides – P2P lending is the millennial that makes the banks feel so “Gen X”. Why millennial? Because P2P is powered by tech, it’s easy, it’s quick, it’s inclusive, and you don’t need previous experience. Let us explain.
Leverage technology progress to create new opportunities
Banks are huge enterprise entities. They use software to improve their operations, but implementing new technology into a bureaucratic structure is challenging and far from quick. Unfortunately, the banking sector fails to catch up with latest tech trends and the human factor still pretty much dominates the industry. Naturally, employing hundreds and thousands of people to manage other people’s finances makes the service heavy, costly and slow to improve.
The Fintech sector made a big difference for one reason: using technology solutions to manage finances is a lot quicker, as well as more transparent for the end user. P2P lending is a great example – it’s a Fintech instrument that allows you to invest your money knowing exactly where it goes, all the while being able to predict your returns with precision, feeling secure about your initial investment. You can invest small amounts, check your results every day, withdraw money whenever you want, and reinvest within a second (even automatically). Simply put, P2P lending is user-centered and you have full control over your funds. We didn’t even mention the part where you don’t have to fill countless sheets of papers to open an account. Register, go through a short compliance procedure and you’re all set.
Can banks ever match these returns?
We recently did a detailed comparison between P2P lending and bank deposits. If you`ve read it, then you probably remember that we mentioned the achievable return rates from both sources. Achievable is not even a viable term for bank deposits, as you have to invest thousands upon thousands, and wait for years to get a decent profit. With P2P, you can start with as little as 10 EUR, and get as much as 15% ROI (depending on the platform you choose).
Besides offering good profit rates and a safe place to put your money, P2P platforms offer high liquidity and flexibility. You can choose between loans of varying size and interest with different payment plans, and unique borrower profiles. You can customize your investment strategy however you please. If you`re feeling lazy or if you want to target a very specific borrower/loan-type, you can even stop investing manually altogether, and setup the auto invest mode to let the platform do everything for you.
User-centric financial management is impossible to achieve in traditional banking, at least in this day and age. Fintech solutions are bringing serious competition to financial markets, and even if they don’t replace conventional banks, they`ve already challenged them by pointing out what’s wrong with the current system. Surely, Fintech and P2P are here to stay and disrupt the way people think about investments and personal savings. Maybe you too will feel like giving it a shot (even if you’re not a millennial?) – register and explore!