P2P lending: intelligent programs, trust and business growth
Since 2008, the financial sector has been growing more volatile, at least in the minds of the general public. Investment in stocks and bonds hasn’t earned the same levels of trust as it had up to the financial crisis and more people have been looking for alternative forms of investment.
Similarly, banks have tightened their lending policies, making personal or business loans hard to come by, especially for those just starting off or people that need to stabilize their cash flow before their credit score could improve. Lending companies, on the other hand, have lost the trust of their clientele with volatile lending and false promises of security.
In this climate of lacking trust and difficult access to funds, crowdfunding has found its soil to grow. Generally, crowdfunding can offer better rates to borrowers, while also giving lenders an opportunity to earn more. Crowdfunding has started primarily with personal loans, a place where a group of investors finance a loan and where borrowers don’t have to disclose what their loan is for. They simply need to be on time with their repayment schedule.
With this relatively lax approach to lending, a significant amount of trust had to be shown among investors and borrowers. This was possible due to the end-to-end intelligent automation of the entire P2P lending process – otherwise known as crowdfunding platforms. These platforms replaced the traditional lending middlemen and put people in contact. Lender and borrowers didn’t have to know each other, yet their financial transactions were made possible.
The amount of businesses, offering the option of crowdfunded loans for business and personal spending is staggering. This is made possible due to the emergence of white label crowdfunding technology, such as Crowdsofts. Developers of this software offer business owners the chance to jump start their crowdfunding venture without enormous investment in the development and support of the program. Rather than building it themselves, entrepreneurs can now rent out their own crowdfunding solution and tailor its look and features to their needs. This increases the chances of such a business taking off, as all the time and effort can now be diverted to sales and marketing.
This easy peer-to-peer exchange may appear just as volatile as the before mentioned financial sector, but this type of lending is arguably getting safer, as platforms carry out stricter credit checks. Investors now have the ability to split their funds into smaller investments, lending out to multiple borrowers to reduce the risk of losing everything to one defaulting borrower. Many sites have also introduced their own protective layers to mitigate the risk of a defaulting borrower. They do so by guaranteeing to return an investor’s full savings if a borrower doesn’t pay up.
Crowdsofts is exactly this kind of customizable white label crowdfunding technology, built for businesses to thrive in this market. We position ourselves as the supportive fintech partner these businesses need and look forward to adapting our software to their requirement. With us, businesses will also inherit the trust of regulating financial institutions that our software already has.
Let Crowdsofts be your fintech partner.