Banks are themselves becoming major lenders on some P2P platforms.
For example, Forbes estimates that in the US, 80-90% of the capital lent through the two largest P2P lenders, Prosper and LendingClub, is now institutional money.
This means that when you take out a P2P loan, you are now less likely to be borrowing from individuals who often combine a social approach to lending with their desire for investment returns. As an investor, you might find it harder to compete for the best value loans.
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- Instead of the hopes of peer-to-peer lending displacing the banks as lenders, it's possible that they are becoming a way for banks to outsource their lending process. Thus leaving the everyday investor to fight for the scraps.
- There is news that the investment bank giant Goldman Sachs may be positioning itself to financially back a peer-to-peer lender, Aztec Money, it seems the innocence of P2P lending may soon die.
- These fundamental changes will affect retail investors more than borrowers, leaving only the less desirable loans on the table for the everyday American investor. Only time will tell, but it's already in motion with banks consuming the majority of peer-to-peer loan opportunities.