Monday, July 12, 2010

Lessons from P2P lending for mobile banking

One of the great things about mobile banking is that, if implemented correctly, it provides for the ability to pay another person. This is something that is so much easier than with traditional banking. This is frequently referred to as P2P payments. When one google P2P, by far the majority of references are of Peer to Peer file sharing and related topics. Long before any references can be found to P2P payments, articles start appearing on P2P banking and P2P lending. This started me thinking...

P2P lending is a mechanism that allows individuals or groups of individuals to borrow money from others with very little (if at all any) interactions from other parties. This approach of interaction between individuals to supply banking products is quite novel, but makes a lot of sense in a connected world. I was wondering what can be learned from P2P lending initiatives vs. P2P payments. This is my un-informed list:
  • I am not clear about the regulatory dispensation required to make loans with different currencies across different regions. Based on my experience with mobile payments, I am sure that this must be a huge challenge. The fact that many examples can be found of successful deployments of P2P lending must mean that this challenge has been solved. I am sure that there must be lessons learned that can be shared.
  • Most of the P2P lending schema's utilise third parties to distribute and evaluate loans. It seems that it would be impossible to get these schemas to work (get them off the ground) without a well-developed agent-network. This is one of the lessons that we have also learned from P2P payments. Finding, appointing and training networks for P2P lending must be similar to those for mobile banking. There must be areas of synergy.
  • Many of the P2P lending initiatives focus on the alleviation of poverty. The thinking is that by facilitating the flow of funds to poor areas, entrepreneurs will be enabled to grow economies thereby creating jobs. This vision is often shared by P2P deployment companies too. There must be some synergies.
As always, just a few thoughts to stimulate ideas and conversation.

1 comment:

Amaar said...

Lending P2P is interesting. Question is how does one prevent the lender from becoming a loan shark? Technically it all will be smooth as the bank or MFI will be able to monitor process, however functional there may be exploitation.

I think the MFI or bank looking to use this needs to have a strict monitoring discipline in place and provide a borrower in the remotest of locations with means and education to report any such instances.

I can see a number of possible ways of utilizing this in Cambodia. May just end up doing a pilot here with AMK Cambodia.