Note from the CEO: Fintech preventing financial crisis? That’s a very tall order and way too much pressure on a “new” technology. So, let me (FintekNews) say “No, it can’t”. The premise is banks loan depositor’s money so they are “loose” with it. P2P makes an investor have “skin in the game” as it were, so that person would make a more prudent decision. Problem: investors typically put their savings/investment money on a platform that makes the loans (for a fee) so, in essence, the platform is now the bank. Individual investors can still get hurt and a financial crisis is still a risk.
"One could argue that we are living in a period of renaissance when it comes to developing new financial technologies. Those new financial technologies, colloquially known as Fintech, include such radical ideas as Bitcoin and block chain technology, as well as more mainstream concepts that involve payments and lending. The fact is, these new technologies are changing the financial landscape. Fintech’s main benefit is essentially a better deal for all parties, whether that means lower fees or higher rates for savers or lower rates for borrowers. There is another key benefit in new Fintech technology which tends to get significantly less exposure.
Of course, I’m talking about the P2P lending model, which is Fintech that has enabled savers and lenders to come together. As with every new business model, especially when it comes to finance, there is tremendous interest but also a stark warning of the risks it poses for those who invest their savings. Yet, paradoxically, the P2P lending banking model may actually have the power to prevent the next financial crisis."
Read Full Article at Forbes.com