Note from the Publisher: If you regularly read FintekNews, then consider this a quick brush up on the Peer-to-peer (P2P) sector, which is far deeper than this piece explores. Still, it discusses P2P in residential real estate loans and insurance (a/k/a “isurtech”), two interesting and growing categories within the sector, which has now been around for over 10 years.
“Fintech has been one of the bright spots on Wall Street for some time now. Firms in this industry have represented the lion’s share of growth in the financial sector. Despite a few recent bumps in the road, the upward trend for the industry seems likely to continue.
Recent growth of the fintech sector results from efficient business models and strategic competition. This is especially true of the peer-to-peer (P2P) lending segment. Fintech companies offer more efficient business models. Plus, their management is more nimble. Executives understand the importance of identifying underserved markets.This allows for innovative financial products at lower costs, which creates new markets instead of competition with banks.
Now the industry is maturing, which keeps costs lower. A recent report from Morgan Stanley points out that global online lending will continue to grow. By 2020, the number of P2P loans should rise from $20 billion to close to $500 billion.The highly efficient business model is also spreading to more segments, specifically equity crowdfunding, mortgage finance, and the insurance sector.