Cyprus Banks & Peer-to-Peer Lending
- Jun 1, 2016
- 2 min read
Banking is undergoing a major transition. No longer the only choice for consumers, banks are facing a tsunami of competition from non-traditional competitors. There are online, non-bank financial services, for everything (loans, investments, money transfers, e.t.c). The field is filling quickly with fin-tech companies & P2P lending platforms, using the most advanced technology to offer a host of alternatives to the public.
Cyprus Banking may be facing its greatest challenges after the crisis, but at the same time is being presented with its greatest opportunities.
Peer-to-peer (P2P) lending came to democratize financial services by using technology to match borrowers and lenders. Viewed favorably by many governments because of its positive role in giving access to finance for small businesses, P2P lending has seen a meteoric rise.
However, Peer-to-peer (P2P) lending still remains a tiny part of overall lending and in most instances, P2P lending platforms just provide the technology but aren’t the actual lenders. Most P2P lenders don’t hold loans on their balance sheet and still use a bank to write loans and sell them to investors.
P2P lending offers opportunities for Cyprus banks on multiple fronts. Cyprus banks with large customer bases and deep understanding of the credit and regulatory environment need to take an active role in shaping the future of P2P lending, by supporting the growth of new entrants and forming win-win relationships. Joint Ventures with P2P lending platforms can help Cyprus banks attract new clients and stimulate much-needed innovation.
While a profound transformation of Cyprus banking is inevitable, for the foreseeable future at least incumbent banks and P2P lenders are destined to be in a symbiotic relationship where each benefits from the other, enhancing the overall value proposition for clients.
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