P2P Lending has been trending due to the likes of CRED and BharatPe’s 12% Club powered by LenDenClub. Although it has been around for a while, the buzz for the segment seems to be revived. I have personally started investing in LenDenClub and have been getting good returns. What are your thoughts on this investment alternative?
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In my idea P2P would not work as pure P2P stack and rather it should be Peer to aggregators to Peer Stack.
The essential role of aggregator here.
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Build a user stack with credit profile (not credit score)as Aggregators now have access to most financial transactions so they can leverage technology to prepare a personalised interest rate and credit risk (A fixed 12% interest thing just doesn’t seem to work)
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A middle man(aggregator) who can take a shared risk for both lenders and borrowers which will essentially build trust in the system.
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Most users should not have a problem earning a 10% interest or 8% interest if the risk is shared by some common aggregator.
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To build a massive P2P stack we will need to invest in basket type credit lines rather than giving loans to direct users eg: home loans for people with avg salary of 25LPA, bike loans/car loans for users with credit score 800+, businesses with annual revenue 1cr etc.
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Building baskets will minimize risk and default rate.
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This is crucial for any p2p platform to gain trust.
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We haven’t decided yet on this product. We are still figuring out risk of the product.
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We borrow from them for our lending product
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