{"id":8419,"date":"2020-09-17T08:00:00","date_gmt":"2020-09-17T08:00:00","guid":{"rendered":"https:\/\/savingsforfreedom.com\/?p=8419"},"modified":"2020-09-18T10:25:15","modified_gmt":"2020-09-18T10:25:15","slug":"p2p-lending-platforms-sustainability-challenges","status":"publish","type":"post","link":"https:\/\/savingsforfreedom.com\/blog\/2020\/09\/17\/p2p-lending-platforms-sustainability-challenges\/","title":{"rendered":"P2P Lending Platforms Sustainability Challenges"},"content":{"rendered":"\n

We are living extraordinary times. P2P lending platforms that rely heavily on large marketing expenditures to generate growth will come under investor scrutiny as they can no longer justify large customer acquisitions costs due to weak transaction volumes… <\/em><\/em><\/p>\n\n\n\n

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\"N26<\/a><\/figure><\/div>\n\n\n\n

P2P Lending Contribution to the World Economy<\/h2>\n\n\n\n

Peer to peer lending is having an enormous contribution towards the economy, by providing financing to underfunded sectors in more and less developed markets. Going forward, it is clear these fintechs need more than ever to be aware of the challenges to growth. If the current economic environment doesn’t prompt P2P platforms to assess their business models in a critical manner, I don’t know what will.<\/p>\n\n\n\n<\/a>\n\n\n\n

Flaws in Business Model<\/h2>\n\n\n\n

For many P2P platforms their business models are simply not working. With models mainly based on “scale” and “critical volume”, the reality shows that even when the platform is capable of reaching and even exceed those desired volumes, they still keep burning through shareholder cash. Cash that from now on may be in shorter supply. The significant drop in lending volumes over the previous months is adding pressure to all industry players. <\/p>\n\n\n\n

Now is the moment to see significant improvements in the industry practices with more emphasis on technology and financial sustainability.<\/p>\n\n\n\n<\/a>\n\n\n\n

Revising Business Models<\/h2>\n\n\n\n

Like all businesses, a lack of profitability simply depends on two things: revenues and costs. On revenue, there are probably limited options because the market has history on what such services should cost, so limited opportunities to increase fees and hence revenue.<\/p>\n\n\n\n

Costs are a more interesting area to examine, with a big potential upside. Let’s explore this.<\/p>\n\n\n\n<\/a>\n\n\n\n

Office, IT and Employees<\/h2>\n\n\n\n