In the world of finance and lending, competition is as wild as ever. Traditional, modern financial institutions, P2P (peer-to-peer) lending and P2P marketplace platforms do all they can to secure their business and clients. In this regard, the modern world stands out for its flexibility and controllability.
Why are control and flexibility important in individual finances?
Unlike big money corporations and banks, individual often possess funds that are best described as…finite. Therefore, it is only natural that an individual would want to indulge in financial transactions that are specifically tailored to match their financial capability. When you consider the total amount of money invested in the world of finance at any given time, unless you’re Warren Buffett, Elon Musk, or Jeff Bezos, as an individual you can most likely be considered as only but a little fellow. At best.
As it turns out, you don’t always have to ‘ride the wave’ or ‘go with the flow’ when investing in finance. It may even be impossible when investing in large conglomerates and other traditional investment vessels. Whereas, with P2P marketplaces, you can tailor your investments to your own liking, maximizing your risk tolerance and/or profit by choosing the loan originator that fits your strategy the most.
Control in P2P marketplaces refers to the ability of a person to have control over the amount of money they want to invest to make their money work, the interest rate they want to charge, and the loan originators they want to cooperate with. They can diversify their investments by spreading their money across multiple receivables and loan originators, reducing their exposure to default risk. There are multiple criteria by which an person can select a loan originator, thus making the decision a well-informed one.
Flexibility is another advantage of the P2P marketplace. Loan originators can access funds with more flexible terms than the traditional way. P2P marketplaces allow for less bureaucracy than traditional financing. By having multiple persons who would like to cooperate with and put their money to work, a loan originator is no longer tied to the whims of a single benefactor.
Flexibility is necessary for both sides
Compared to traditional banking, P2P marketplace may offer advantages in bulk. One of the most significant advantages of P2P marketplace is its flexibility. It allows both loan originators and the persons who would like to invest to tailor their money for their individual needs.
The most critical example of flexibility in P2P marketplace is it helps loan originators avoid restrictive bureaucracy. Unlike traditional lending institutions where the loan originators can rise the funding for their business development, P2P marketplace platforms have the criteria that help cover the whole spectrum of clientele, and loan originators have better chances to receive funding – with diligent evaluation, loan originators can expect a more forthcoming approach. This flexibility enables loan originators to access money, which they may not have been able to obtain otherwise, enabling them to fund their businesses. And in return, persons have access to a much wider market.
P2P marketplaces offer persons the flexibility to choose their level of investment, the type of product where they want to allocate their money, and the risk level they are comfortable with. This flexibility allows persons to diversify their portfolios, reduce their risk exposure, and earn attractive returns on their investments.
In P2P marketplaces, persons and loan originators will not negotiate rates, terms, and other requirements. Loan originators will simply make their existing receivables available on the marketplace. That way, a loan originator is able to provide service for more of their clients while persons using marketplace can earn returns that meet their investment goals.
Last, but not least – P2P marketplaces offer flexibility in the whole process, as well. For example, you can make your money earn from your couch or anywhere else in the world, since it is easily done online. You can do it almost anywhere in the world, too – be it your local loan originators or others, half a world away.
While most of the world is transforming and moving their business online, finance stubbornly clings to old-fashioned ways. This is where P2P marketplaces and modern financial institutions have the upper hand.
As previously mentioned, you don’t need a bankroll like Mr. Buffett, either. You can start using the marketplace services from as low as €10, for example.
Control and flexibility are important components of P2P marketplace, offering a range of options to the persons using their services and allowing them to tailor their investments to their individual needs.
The flexibility of P2P marketplace enables loan originators to obtain funds more quickly and easily. While, at the same time, persons using marketplace have control over their money, by being able to pick individually where and how to put their money work, increase the diversity of their portfolios and earn attractive returns.
These are significant differences between traditional and modern attractions of financing. But control and flexibility are neither the only nor the last to come. As the P2P industry continues to gain popularity, the perks and opportunities it will be able to offer are likely to ‘blow the competition out of the water’ even more.