ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Is Peer-to-Peer Lending the Future of Banking

Updated on November 27, 2013

Peer-to-peer lending is flourishing, rapidly. However, where is this growth leading, what is its future and what is its role in traditional banking? Peer-to-peer lending is the funding option for millions of individuals and SMEs around the world that cannot secure a loan from a bank for one reason or another. For many, especially the small business owner, this is often the only option they have to get access to funding. As a result of the demand, the biggest P2P lenders in the U.S. market, Lending Club and Prosper, are responsible for over $1 billion in funds to American citizens and their ventures. In comparison, only 25% of all lending has come from traditional U.S. banks.

It was 2006, in San Francisco, where the peer-to-peer lending industry was first established. In just 7 years, it has grown exponentially and spread globally where individuals and businesses have eagerly embraced it. It’s no wonder that the P2P industry started in America – in many respects its concept is synonymous with the American dream. By giving people the opportunity to get funding without having to approach banks. No need for lenders and borrowers to meet, no extra costs and a relatively rapid financial arrangement, P2P lending is easily completed online, making all parties satisfied. Peer-to-peer lending flourished at a time of a global recession, when banks weren’t willing to lend.

In the U.K. the peer-to-peer lending industry is also thriving. Technological advancements have had a positive impact, the positive ratings of American-based companies have given U.K. citizens the confidence to trust P2P lending and ignore the banks. The question we are all asking is can the peer-to-peer lending industry continue its growth, even post global recession when, in theory, the banks become more generous again.

The benefits of P2P are clear for consumers and small business owners due, in part, to the fact that the growth has stayed almost unchecked for the past 5 years. It’s unlikely that banks will relax their excessively stringent lending practices overnight, however, it is possible that with more favourable rates more individuals will start to perceive banks in a more positive light. Will a growing confidence in traditional banking have a strong diminishing effect on P2P lending?

One of the immediate challenges of the peer-to-peer industry in the U.K. is the introduction of regulations. For many P2P businesses this will be a good thing and many are actively campaigning for better regulation. However could these regulations have an effect on aspiring borrowers with poor credit history? The U.S. P2P regulations are planned for January 2014 and the U.K. will implement theirs in April 2014.

Making predictions based solely on these changes is perhaps too brave, however it is widely believed that the lack of many alternative funding options in the U.K. will eventually maintain the success of P2P. P2P lending, though approaching a pivotal juncture, will most likely suffer only a minor decrease in appeal. It’s been offering a bright and liberated future to start-ups throughout the world and therefore, there is enough optimism for the long-term growth of the industry.

So far, P2P lenders in the U.K. have kept bad debts impressively low which is quite promising. One of the latest newcomers in the industry in the U.K. is called FundingSecure. Started as an alternative for individuals and small businesses, FundingSecure is an innovative scheme that takes P2P lending one step further. It is the first P2P pawnbroker in the U.K., allowing its borrowers to take out loans against an asset. This asset backed lending removes much of the risk and this innovative approach towards P2P lending and pawnbroking may well be one of the remedies that keeps the industry growth on track.

FundingSecure has been trusted by over 200 savers and has given more than 100k in loans. All of that was managed within less than 5 months. The average interest rate set by borrowers to savers has remained almost a constant during that period – never less than 11%. FundingSecure allows its borrowers to repay within 6 months, thus ensuring quicker returns to savers. If you’d like to learn more about FundingSecure, head to their website where you can calculate your potential return as a saver or make a loan enquiry.


Would you consider trying Peer-to-Peer Pawnbroking?

See results


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)