An Inside Look at the Working of a P2P Lending Platform
is disrupting the overall financial market with its power to
revolutionize the industries. Lending platforms are also positively
embracing blockchain. Blockchainis
all set to reconstruct the lending model by bringing more
transparency and trust in the system.
in the Traditional Banking System
traditional banking sector lending process includes third-party
involvement. Middlemen such as loan officers, banks, underwriters or
loan processors build the trust between the borrowers and the lenders
and thus charge a huge amount of fees for the same.
approval of a loan or credit also takes a couple of weeks to process.
There is also a huge difference in the rate of interest offered by
these banks worldwide. For instance, countries like the United States
and Algeria process loans at a rate of 4.8% and 8% respectively. On
the other hand, Bangladesh lends a loan at an interest rate as high
offered by a P2P crypto lending software
The integration of blockchain in peer to peer lending is revolutionizing the whole ecosystem. It removes the intermediaries from the system and hence makes the system more efficient. Following are the main attributes of peer to peer lending software development:
P2P lending software minimizes the cost as borrowers and lenders are
connected directly on the platform. There is no need to develop a
physical infrastructure where parties would meet.
The processing on the blockchain is done instantaneously. The entire
process is quickly executed through the system of smart contracts.
interest calculations: Flexible
interest calculations provide an opportunity to calculate the
interest rates on a daily, monthly, quarterly or yearly basis as per
the business model.
crypto lending software connects both borrowers and lenders across
the globe on a decentralized platform. Let’s further discuss which
are the different parties involved in the process of P2P lending.
Stakeholders that play a major role in the P2P lending platform:
Lender: A person who lends the money to the other party.
Borrower: The person who requests the credit from the lender with the prospect of returning the same within the stipulated time.
Guarantor: This depends on the business model. If the model involves a guarantor, he/she guarantees the loan on behalf of the borrower. It means that in case the borrower defaults the loan the same would be paid to the lender by the guarantor.
of a P2P lending software development
1: Lender creates his profile
the lender creates his profile and confirms that he is willing to
credit the amount to potential borrowers. The lender usually mentions
the following aspects in his profile:
information (such as name, address, ID number and other)
type of investment the lender wishes to make
for choosing the type of borrower
profile of the lender is updated in the market place so that both
borrower and lender could find each other.
2: Borrower creates an account
the borrower creates his account by providing the following
information (such as name, address, approved ID)
the legal documents (if required)
the profile of guarantor (if required by the business model)
3: Borrower sends a request for the loan in the system
the account of the borrower has been created successfully, he can
send the credit request in the system which will be shown globally on
the peer to peer lending software.
4: Order processing in the matching engine
as the borrow order is put by the borrower on the platform, the
matching engine starts its processing. It processes all its profiles
and suitably matches the borrower with an appropriate lender. Hence,
the loan is fully matched.
5: Approval of the loan
is approved by the matching engine by checking the essential
collateral requirement inserted by the borrower. Therefore, the loan
amount is transferred to the borrower’s wallet.
6: Loan repayment
amount is repaid by the borrower. In case the borrower fails to repay
the loan amount, then his collateral will be sold out in the open
how the P2P lending process works for the crypto market. This
revolutionized model is sure to help in reducing delays, making quick
approvals, eliminating the need for middlemen and bringing in more
The new lending marketplace is expected to reach a value of $290 billion by the year 2020. If you are also looking for building your P2P lending platform then associate with an experienced P2P crypto lending software development company like us to navigate your development journey. We offer a white label P2P lending platform to expedite the deployment process.
To know about our turnkey solution, schedule a free demo with our subject matter experts.