Growing adoption of technologies with the increasing use of digital-based services has significantly driven the online lending market. The introduction of digital platforms for lending has greatly helped lenders and borrowers by offering a superior lending experience. Startups, individuals, and even established companies are leaning towards such marketplaces to avail easy and quick loans.
As per the report by Research and Markets, “The global digital lending market size is expected to grow from USD 5.1 billion in 2018 to USD 12.1 billion by 2023, at a CAGR of 18.7%.”
The report suggests that the market size of digital lending is projected to increase by more than 200% over the next four years. Major growth factors for the market include automation, a range of tailored services, and enhanced customer experience.
Through innovative technologies and advanced algorithms, digital lending platforms have streamlined peer to peer lending for individuals and businesses. They adopt a much more precise and personalized approach to deliver lending solutions. Here are some advantages that online lending marketplaces offer to lenders and borrowers.
Fast and convenient
As the name suggests, digital lending marketplaces run entirely online, thus, offer a faster and more convenient approach towards lending operations. Being online combined with automated decision-making algorithms, platforms ensure faster turnaround time, instant approvals and credit checks. The platforms thus eliminate issues faced by both lenders and borrowers in traditional methods.
Lower rates and higher returns
Since being online abolishes a host of expenses, such platforms tend to offer lower interest rates and higher returns to borrowers and lenders, respectively. Comparing to traditional methods where interest rates are so high, and excessive value of the collateral is demanded, online lending marketplaces generally offer unsecured loans to borrowers with flexible return options.
Compare several options at once
Online lending marketplaces are beneficial in the sense that they let the borrower compare and choose the most viable loan options. This makes it easier for borrowers to avail the best interests and terms possible. On the other hand, lenders also get to look at the profile and credit scores of various borrowers to ensure risk-free lending.
Best for small businesses & those with an average score
Lending platforms like Prosper, Lending Club, and Kabbage have become a great source of quick funds for small businesses and individuals even with an average or low credit score. These platforms offer easy application process, automated credit checks, faster approvals ensuring quicker turnaround time at every stage.
For lenders and borrowers, online lending marketplaces could be a great alternative when compared to traditional methods. However, digital lending is still a new frontier to many with some hurdles yet to be covered.
The way ahead
With the rising popularity of online lending marketplaces, banks and Fintechs are constantly exploring the space to offer the best lending solutions to online borrowers. Akeo Lending emerges as a one-of-a-kind modular framework that helps to develop p2p lending platforms without building everything from scratch. Akeo Lending comes with a modular back-and-front-end architecture that gives businesses a pedestal to build customized P2P lending platform quickly.
In all, as technology and innovation continue to evolve, digital lending platforms will continue to expand as well. These platforms are proving to be a convenient and reliable source of funds for small business owners and people, particularly who need urgent funds. Most likely, they will enhance the online lending experience for both lenders and borrowers.