Displaying items by tag: p2p lending

The tumult in Indonesia’s P2P lending industry should not come as a surprise. It is exceedingly difficult to both regulate this industry fairly and allow it to maximize financial inclusion benefits. Strict regulation such as is practiced in Taiwan and South Korea (though Seoul may make some changes soon) minimizes malfeasance but also limits the usefulness of the platforms. Amid the current meltdown of P2P lending platforms, which is hitting retail investors hard, the sector faces an inflection point in Indonesia.

Indonesia's P2P lending sector has been growing fast for several years now, providing a vital credit channel for cash-strapped consumers and SMEs. In February, online lending increased 225% annually to reach US$6.1 billion, 80% of which was in the P2P segment, according to data compiled by the Indonesian government. Then the coronavirus pandemic hit the country of 267 million, plunging it into a technical recession. While several of the largest P2P lenders are weathering the coronavirus pandemic well, others are not so fortunate. The economic fallout from the virus may end up having a more profound impact on the industry's development than regulatory measures enacted last year to reduce compliance failures and protect consumers. 

P2P lending grew steadily in Indonesia last year on the back of robust demand from both SMEs and the consumer market.From January to May, the Indonesia P2P sector grew 44% to reach IDR 41 trillion (US$2.92 billion), according to Indonesia's Financial Services Authority (OJK). 

Taiwan has a fairly well developed financial industry. This small island has a population of only 24 million in total, but has access to more than 5,000 physical financial institutions. Customers, therefore, are able to enjoy all the banking services provided with ease. Plus, the interest rates on loans in Taiwan are extremely low with only 2.63% APR. The application for a fiduciary loan becomes relatively easy for office workers. Thus, FinTech derivatives such as P2P lending are not previously widely considered.

KoinWorks, Indonesia's largest P2P lending platform, has raised US$16.5 million in its Series B funding round, signaling strong interest for alternative lending sources in Southeast Asia's largest economy. Established in 2016, KoinWorks caters to the underbanked and unbanked alike in Indonesia, whose scant credit profiles do not sit well with traditional lenders.

Chinese peer-to-peer lending firms, reeling from the crackdown on P2P business at home, are starting to look for new business overseas. The fledgling India market is of great interest to several Chinese P2P companies, including 9F Group, CashBUS, and WeShare, according to reports in India's English-language media. The Chinese firms are attracted by India's huge size, steady economic growth and relative easy of market entry.

As one of Southeast Asia's preeminent markets, Indonesia offers strong opportunities for fintechs. With a population of 265 million, it is larger than Vietnam, Thailand, Malaysia, Myanmar and Cambodia combined. In 2018, the Indonesian economy expanded 5.18%, beating economists' forecasts.

Vietnam plans to roll out a pilot peer-to-peer (P2P) lending scheme to boost financial inclusion in one of Southeast Asia's fastest growing economies. The pilot program will permit P2P lending firms to serve as intermediaries between lenders and borrowers, but they will be restricted from fundraising activity.

Peer-to-peer lending in China is cratering amidst a heavy-handed government crackdown aimed at stamping out fraud in the once-booming online loan sector. Nationwide, authorities are tightening the screws on the $176 billion industry. By some analysts' estimates, the crackdown could wipe out up to 70% of China's P2P firms. Among the most recent major firms to call it quits is Shanghai-based Yidai, who kicked off 2019 by announcing it was exiting P2P lending. Its 32,000 lenders (with a principal balance of RMB 4 billion) would be repaid within five years, the company said.

India’s banking regulator, the Reserve Bank of India (RBI), recently released a consultation paper on P2P lending in India. This paper aims at regulating India’s fledgling P2P ecosystem, demonstrating that the RBI is positively besieged with the concerns and realities of this nascent industry.