The emerging P2P industry has been growing at a momentous pace over the last decade. This is because investors feel comfortable borrowing money from individual investors with the help of P2P platforms compared to traditional banks.
This practice of lending and borrowing money is quite simple and easy. Borrowing or lending with just a click of the mouse, along with low-interest rates, accelerated decisions and simplified applications continue to make the peer-to-peer model a big rival for banks. According to a PWC report, the U.S. P2P market is likely to reach $150 billion by 2025. Another report from Allied Market Research indicates that Peer to Peer (P2P) market could grow at a CAGR of 51.5% from 2016 to 2022.
Regulations Could Temporary Halt P2P Market Growth
China, the world’s second largest economy and the largest P2P market, has been going through difficult times amid new regulatory restrictions. The new regulations from Chinese financial watchdogs have been driving out several operators.
The new rules were introduced due to the big losses suffered by retail investors through P2P lending; retail investors blame lack of regulation for losses
Fitch Rating agency, however, claims that better supervision is a good sign for the longer term health of the emerging industry. The agency believes lender with more robust business models, more stable access to funding and established risk-management capabilities will likely gain market share.
The U.S. and other Key P2P Markets are Well Regulated
The U.S. and the majority of European P2P markets are complying with regulatory policies. The U.S. P2P lending platforms are complying with Securities Act of 1933. India, which is one of the biggest P2P markets, is also well regulated by the Reserve Bank of India. On the whole, the simple and easy way of borrowing and lending through P2P platforms is likely to increase in the coming days despite some regulatory challenges.