Invest & Fund: P2P lending has proven its resilience
Invest & Fund has highlighted the resilience of peer-to-peer lending as the sector has weathered all manner of conditions over the past 18 years.
In a blog post to investors, the lender said that the P2P sector has several benefits, with one strong point of P2P lending platforms being diversification.
Invest & Fund added that the pool of borrowers and lenders across various industries and geographic locations is typically diverse for P2P lending, which helps to mitigate the impact of macro events that may affect specific sectors or regions.
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“P2P lending platforms are often more agile than traditional financial institutions,” said Invest & Fund.
“We can quickly adapt to changing market conditions and adjust our lending criteria or interest rates accordingly.”
Another factor that has given the sector the edge is risk assessment and borrower selection, the platform noted.
P2P lending platforms usually employ thorough risk assessment models and selection processes, and can leverage technology and data analysis to evaluate the creditworthiness of borrowers. In turn, this careful selection process helps to minimise the risk of defaults and delinquencies.
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P2P lending also operates on a decentralised platform where individual lenders directly lend to borrowers without intermediaries, and because of this structure, the platform often reduces the systemic risks associated with traditional banking systems.
Invest & Fund has returned over £144m of capital and interest to lenders with zero losses to date.
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