Today’s our story is about the latest twist in the path-to-profitability journey of large fintech platforms like MobiKwik and CRED, each wielding tens of millions of active users—have started forging partnerships with peer-to-peer (P2P) lending platforms.
Earlier in October, MobiKwik launched a P2P-investment platform—Xtra—in collaboration with Lendbox. Before that, CRED acquired a minority stake in the Mumbai-based P2P-lending platform LiquiLoans. The list goes on.
And it’s not that fintechs haven’t tried to get into lending before. They’ve partnered with NBFCs and banks to offer a variety of loan products, but hit some snags with that strategy. Mostly because NFBCs demanded default loan guarantees, which was costly for fintechs.
The P2P-lending variant, where the money to be lent is sourced from individual retail investors as opposed to institutions, is yet another attempt by fintechs to make it work. And maybe it will this time, as both partners stand to gain.
Through their fintech partners, P2P-lending platforms have a much wider audience to target. It significantly lowers customer-acquisition costs, and they can disburse loans more quickly. They don’t ask their partners for default loan guarantees.
On the flip side, fintechs have more exciting products to offer their customers, and they get a cut on the interest rates through the partnership agreement. But even if they no longer need to price in a default loan guarantee in this arrangement, fintechs are still taking a risk by going down this lending route
