In this p2p business model, the process is simple and very to understand. In this pattern, a lender doesn’t know the borrower’s information. Online peer-to-peer lending (P2P lending) is booming as the popularity of e-finance (Kiisel 2013; Berger and Gleisner 2009). According to the International Organization of Securities Commissions (IOSCO), the two overarching business models for P2P lending are the notary model and the client-segregated account model. In: Proceedings of the 3rd Workshop on Social Network Mining and Analysis, ACM, New York, NY, USA, Kiisel T (2013) Peer-to-peer loans. Manage Sci J 59(1):17–35, Perlman JW (2012) Peer-to-peer and group financial management systems and methods: U.S. Patent No. Springer Nature. 2. buying an apartment, financing a company). P2P lending process describes the P2P lending process. Process Model is a standard for business process modeling that provides a graphical notation for specifying business processes in a Business Process Diagram (BPD). Manage cookies/Do not sell my data we use in the preference centre. Peer-to-Peer (P2P) lending is a relatively recent financial innovation that has taken the lending market by storm and fueled financial inclusion. They find strong evidence of herding and its diminishing marginal effect as bidding advances (Lin et al. Blockchain-based P2P businesses are broadly divided into two models, the hybrid model and the pure cryptocurrency model. The P2P lending company dispatches the money to different borrowers. P2P lending is emerging in this step, so many risks are there. The main process of lending mechanism are almost the same across different online peer-to-peer lending platforms. Never invest more than you can afford, and do your own research before investing. 8280788. While it is easy to keep up with the new dynamics in the p2p sector, one aspect that can really affect how the platform functions seem to have escaped the attention of many investors and borrowers. Therefore, to develop a conceptual model for the P2P lending process is great valuable for managers tackling the issues on marketing, management and operation. Indeed, a dozen companies have started to deploy blockchain-based P2P lending platforms. In traditional bank lending, funds are listed as liabilities and loans are listed as assets on the balance sheet of the bank. the loan originator company whom it may take months or years to collect the debt if the borrowers fail to pay the loan and the originator keeps receiving funding, thus stretching the risk across several years, instead of slowly seeing the actual defaults by borrowers. Second, big data analysis techniques and models are needed to predict risk in credit audition. 1). Alternatives to P2P Lending. This means that there are three participants in the business model: 1. the borrower, 2. the platform and 3. the lender. BuR-Bus Res J 2(1):39–65, Article  The traditional p2p lending business model involves just the lender, the borrower, and the third party or the middleman who facilitates the whole process of borrowing, disbursement, and loan repayment; or the peer to peer lending platform. The peer to peer platforms figured that by not having to get out and find borrowers themselves would give them an edge over traditional p2p lenders, as it allowed them to direct their focus on trying to attract new investors. In this paper, we focus on the P2P lending process model and provide a comparative analysis comparing with traditional bank loan process. The environment of P2P lending system is shown in Fig. Potential users, including borrowers and lenders first have to register with personal information, such as ID card number, bank account, personal information in a third-part credit institutions, etc. In Europe, it can generate an average yearly ROI of 12%. Department of Financial Mathematics and Engineering, South University of Science and Technology, Shenzhen, Guangdong, China, Huaiqing Wang, Kun Chen, Wei Zhu & Zhenxia Song, You can also search for this author in Based on these information, credit rating of users are calculated. In this paper, we compare the procedures between P2P lending and bank loan. These platforms have popped up everywhere and retail customers have great opportunity. 16 May 2019 1 7 4 This post is from a series of posts in the group: Innovation in Financial Services. Once a listing is materialized into a loan, money will be transferred from the accounts of listing lenders to the accounts of listing borrowers. You can obtain similar rates of return (usually 3-4% less than P2P lending) but these other types of investors tend to be safer as they involve collateral. Prosper (https://www.prosper.com/) is one of the largest lending platforms in the world and had attracted 1.96 million registered members and had facilitated over $635 million in loans by August 2013. A process model on P2P lending. 2. Tata Consultancy Services’ Sasidharan Chandran discusses P2P business models, associated risks and implications of the crowdfunding industry on the traditional banking setup. In the financial industry, P2P model provides a new pattern on group or crowd financial product design and management. volume 1, Article number: 3 (2015) The paper is structured as follows: in paragraph 1. Marketplace lending, also commonly referred to as peer-to-peer (P2P) lending, has rapidly gained market share over the last decade. Start investing in P2P lending. To the end of 2014, there are 1575 P2P lending companies in China, and the total trading value is up to 25.28 billion Yuan (about 4 billion US$). https://doi.org/10.1186/s40854-015-0002-9, DOI: https://doi.org/10.1186/s40854-015-0002-9. The rest of the paper is organized as follows: Background study reviews relevant prior work on P2P lending. ⇒ Notary model . PubMed Google Scholar. Third, the post-loan management is a critical problem in P2P lending process design. If, like myself, you want to diversify beyond P2P lending, I would suggest you read up on real estate crowdfunding platforms as well as crypto interest accounts. Wang, H., Chen, K., Zhu, W. et al. Investments are done via crowdlending platforms. It is given a brief description of Fintech, Crowdfunding and Peer-to-Peer (P2P) lending. In this paper, we will focus on the P2P lending process model and provide a comparative analysis compared with traditional bank loan process on both aspects of money flow and information flow. This model is a completely new model of lending-based p2p, which involves, on top of the three traditional players, the non-bank financial institutions known as loan originators. This innovative financial activity refers to unsecured direct loans between lenders and borrowers through online platforms without the intermediation of any financial institutions (Lin et al. Online peer-to-peer lending (P2P lending) is booming as the popularity of e-finance. 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