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Peer-to-Peer Lending Market: Influential Factors Determining the Trajectory of the Market

Low Cost of Operations Drives P2P Lending Market

The unprecedented penetration of internet across the globe that is allowing borrowers to seek funds is propelling the global peer-to-peer lending (P2P) market. Technological advancements that are permitting users to have a smooth access to interfaces that offer quick updates is also augmenting this market. The research report published by Transparency Market Research states that the opportunity in the global P2P lending market was worth US$26.16 bn in 2015. Analysts predict that the market valuation will reach US$897.85 bn by 2024, as it expands at a significant CAGR of 48.2% from 2016 to 2024.

The growth of the global P2P market is mainly being driven by growing advancements in technology that is encouraging potential consumers and existing players to make quick decisions. The low cost of operations is also supporting the growth of this market in comparison to the growth rate of conventional money lending institutions. Additionally, increasing student population is also propelling the global P2P lending market as a majority of the students seek loans at cheaper interest rates than what is offered by traditional money lenders. However, the risk of investors losing their money due to defaults on repayment is likely to have a severe impact on the growth of this market.

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Easy Access to Funds Makes P2P Lending a Popular Choice

The long-drawn process of securing loans has paved the way for global P2P lending market as it ironed out the creases of seeking funds in more ways than one. This is the single most important factor lure small businesses towards opting for P2P systems of borrowing and lending. The strict regulatory framework, complicated compliance structure, and the hefty overheads have all made small business owners, entrepreneurs, and startups lean towards P2P market. As new businesses emerge, they are likely to drive the global P2P lending market to a brighter future in the coming years.

Small Businesses to Ensure Rapid Growth of P2P Lending in Asia Pacific

As of 2015, North America held a dominant position in the P2P market, accounting for over 43% share in the overall market. The reducing interest in conventional banking, increasing dependency on online platforms, and recent history of financial crisis in this region has prompted P2P lending market to take lead cater to the unmet financial demands of the population. Meanwhile, the P2P lending market is estimated to show rapid progress in Asia Pacific. The emerging economies of China, India, Japan, and Australia will make a significant contribution to the rise of this market in Asia Pacific. The primary growth driver for this region will also be small businesses that will seek financial alternatives to fund their projects.

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Some of the key players in the global P2P lending market are Daric Inc., LendingClub Corporation, CommonBond Inc., Prosper Marketplace, Inc., Upstart Network Inc., CircleBack Lending, Inc., Funding Circle Limited, Peerform, and Social Finance Inc., Pave, Inc. Research suggests have the rising number of small businesses are offer great many growth opportunities to the global P2P market to grow and flourish in the coming years.

 

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