P2P opportunity as banks slow down lending

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Last Updated on August 1, 2022 by Bitfinsider

Platforms for peer-to-peer lending offer a chance to draw in new customers as high street banks tighten their lending standards.

According to recent data, banks are becoming more cautious when it comes to consumer, commercial, and mortgage lending because of pressures from inflation and rising interest rates. This implies that a large number of company and consumer borrowers may be unable to obtain funding from conventional lenders in the upcoming months.

However, a number of P2P players have emphasized that P2P lending platforms have spent the pandemic optimizing their procedures and are now able to scale up their operations in advance of increased borrower demand.

Plend’s CEO, Rob Pasco, noted that many customers have turned to P2P lending after being denied a bank loan since his consumer lending platform went live in beta mode in mid-May.

Banks reported a decline in secured loan availability to consumers in the three months ended May 31, 2022, along with growing default rates, according to the most recent Bank of England statistics.

During the third quarter of this year, it is anticipated that secured credit availability will decline once more. In the meantime, consumers’ access to unsecured credit increased little in the second quarter of the year, but it is anticipated to decline by the end of the summer.

This has prompted some economists to issue similar credit crisis warnings to those issued during the global financial crisis of 2007–2008, which fueled the expansion of P2P lending.

Banks are subject to capital adequacy standards that ensure they are not making reckless loans ever since the global financial crisis.

The severe credit assessment procedures used by P2P lenders, despite the fact that they are exempt from these restrictions, are intended to make sure that only the most creditworthy borrowers obtain lender funding.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.

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