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Peer-to-Peer (P2P) Lending Platform Development
Features, Benefits, Costs, Development Steps
ScienceSoft applies 18 years of experience in creating software for financial services to help peer-to-peer lending businesses design and launch robust P2P lending platforms.
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Peer-to-Peer Lending Software: Short Summary
Peer-to-peer (P2P) lending software aims to directly connect private lenders with individual and business borrowers without the involvement of third-party intermediaries, such as financial institutions or legal entities.
Also known as lending marketplaces, such platforms offer seamless criteria-based search of optimal loan offerings for borrowers and investment opportunities for lenders.
Custom P2P lending software can be powered with artificial intelligence and blockchain to enable accurate assessment of borrower credit risks, automate loan origination and servicing processes, and provide full traceability of P2P lending activities.
How to create P2P lending software in 7 steps
- Research the competition and target audience needs.
- Define the niche and USP for your P2P lending solution.
- Design P2P lending software and select the optimal tech stack.
- Determine project deliverables, scope, and resources.
- Develop your P2P lending software and run manual and automated tests.
- Establish integrations with the required business and third-party tools.
- Release and promote your P2P lending app.
Supported types of loans:
- Consumer and business loans.
- Domestic and cross-border loans.
- Fixed-rate and variable-rate loans.
- Secured and non-secured loans.
- Joint loans.
- Multi-currency loans (including cryptocurrency loans).
Main integrations: accounting software, payment gateways, a BI solution, credit rating systems.
Implementation time: 9–15 months on average for a custom P2P lending platform.
Development costs: $400,000–$1,000,000+, depending on the solution’s complexity. Use our free calculator to estimate the cost for your case.
Main Use Cases for P2P Lending Software
The global P2P lending market is expected to show a more than 8x growth by 2030. Key factors that drive the popularity of P2P lending platforms among borrowers and lenders are fast, cost-effective, highly accessible P2P credit services and high payback from P2P financing. This creates momentum for P2P lending companies to step into the fast-evolving market with a brand-new solution and promptly generate revenue.
At ScienceSoft, we recommend our customers to leverage the value of the peer-to-peer lending model in the following domains:
Consumer loans
Involving private lenders to finance the large-value personal expenses (e.g., home improvements, education, vacations, car purchase, or healthcare services).
Borrowers’ benefit: Lower loan price and faster funding compared to conventional lending.
Lenders’ benefit: The ability to achieve up to 12% annual ROI for investments with minimal risks.
Microlending for businesses
Connecting private and institutional investors with SMBs looking for microfinancing to expand the product line, purchase equipment, launch a marketing campaign, etc.
Borrowers’ benefit: Prompt access to the required funds at an affordable cost.
Lenders’ benefit: Higher payback compared to other investment options plus an opportunity to diversify portfolio risks.
Crypto lending
Introducing a blockchain-based lending marketplace that enables seamless origination and servicing of peer-to-peer cryptocurrency loans.
Borrowers’ benefit: High loan accessibility paired with minimal requirements to the credit history.
Lenders’ benefit: The ability to reach a global borrower base, generate significant profit, and maintain full transparency of lending operations.
Key Features of a P2P Lending Platform
In ScienceSoft’s peer-to-peer lending software development projects, our team creates solutions with unique functionality tailored to the needs of each specific client. Below, we share a comprehensive list of features that form the core of an effective P2P lending platform.
General functionality
Account management for end users
- Configurable self-registration forms for borrowers and lenders.
- Adding and updating account information: personal/business data, billing details, including tax IDs, payment method (bank account, credit card, digital wallet), etc.
- Uploading the required documents:
- (for businesses) proof of sustainability: a cash flow statement, a balance sheet, etc.
- (for individuals) proof of creditworthiness: a personal income statement, a proof of employment, salary slips, etc.
- A full audit trail of user account activities.
- Instant messaging for lenders, borrowers, and platform admins.
Borrower credit risk assessment
- Automated extraction and validation of data provided in the borrower documents.
- AI-powered assessment of borrower credit risks based on the data available in the borrower documents and public data sources (e.g., credit rating platforms).
- Customizable formulas for borrower credit risk scoring.
- Assigning borrower risk scores to the borrowers’ accounts to make the risk data visible for lenders.
- Borrower segmentation based on credit score, monthly income, location, etc.
Payment processing
- Automated processing of payments via the connected payment gateways.
- Support for multiple payment methods (bank transfer, credit card, e-wallet, etc.) and payment currencies, including cryptocurrencies.
- Recurring payment deductions via a borrower’s preferred payment method, triggered by a loan repayment schedule.
- Setting up and automatically charging a platform service commission (a fixed amount per deal or a percentage of the amount borrowed).
Security and compliance
- Multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition).
- Role-based access control.
- AI-based fraud detection.
- Data encryption in transit and rest.
- Scheduled deletion of borrower and lender data.
- Compliance with IFRS9, CCPA, CECL, GLBA, FCRA, FCBA, ECOA, FDCPA, SOX, SOC1 and SOC2, PCI DSS, GDPR and PSD2 (for the EU), other relevant global and country-specific regulations.
Lender-side features
Loan terms management
- Template-based creation of loan offerings with user-defined terms: loan type, amount, currency, duration, APR, interest rate, collateral, penalties for early or late loan repayment, and more.
- Setting up borrower requirements (e.g., minimal credit score, minimal income, location) to qualify for a loan.
- Configurable loan limits for various borrower segments, e.g., offering higher loan limits to borrowers with lower credit risks.
- Automated processing of received loan applications.
- Calculating the expected payback based on the loan amount, amortization period, and interest rate.
- Automated decision-making on loan approval.
- Instant communication of a decision on loan approval or rejection to the borrower.
- Template-based creation of loan agreements with user-defined loan terms.
- E-signing of the lending documents.
- Automated transfer of the agreed loan amount to the borrower.
- Automated loan reporting to credit bureaus.
- Automated generation of loan repayment schedules.
- Calculating a monthly loan repayment amount, including principal and interest amount and service fees (if applicable).
- Scheduled creation of invoices on due loan repayments and sending them to borrowers.
- Real-time tracking of the received amounts and loan repayment status (due, partially repaid, fully repaid).
- Personalized payment reminders to borrowers.
- Alerts to lenders on missed loan repayments.
- Rule-based loan extension, restructuring, refactoring, or transfer upon a borrower’s request.
- Automatically imposing penalties on the borrower in case of late payment or non-payment.
Loan portfolio management
- Template-based creation of loan portfolios with user-defined structure and hierarchies.
- Monitoring the received loan applications, granted loans, loan amortization progress, etc.
- Real-time calculation of loan portfolio risks, including default risks for each particular loan.
- AI-based forecasting of financial gains per loan portfolio.
Borrower-side features
Loan calculator
- Setting up user-defined criteria (a loan purpose, the amount needed, the desired term, max interest rate, etc.) to find the fitting loan offerings.
- Calculating APR and the total cost of a loan for various loan offerings.
- Side-by-side comparison of loan offerings from multiple lending providers.
- AI-powered suggestions on the loan offerings that are the most cost-effective.
Loan application and repayment
- Template-based creation of loan applications.
- Scheduled and ad hoc submission of a loan application to the selected lender(s).
- Real-time tracking of the loan application status: sent, approved, funded, etc.
- Scheduled and ad hoc loan repayments via the selected payment method.
- Notifications to borrowers on due loan repayments.
- Tracking paid and outstanding invoices.
- Creating requests for payment rescheduling or loan prolongation and sending them to lenders.
Admin features
User pre-qualification
- Setting up role-specific user requirements, e.g., location, minimal monthly income, minimal age (for individual borrowers), etc.
- AI-based validation of user data: user identity, phone number, bank account information, proof of income, etc.
- User pre-qualification against the pre-defined requirements.
- Geography-based KYC/AML verification for the platform users.
- Rule-based approval of borrower and lender accounts.
Platform analytics
- Calculating and tracking essential platform KPIs (by period, location, borrower segment, etc.), such as the total volume of lending deals, average deal value, total revenue generated, and more.
- Scheduled and ad hoc reports on the selected metrics.
- Configurable dashboards providing real-time view of user account activities, platform-wide lending and payment transactions.
Trendy P2P lending features to consider in 2023
Our P2P lending platform development company can power your solution with the cutting-edge artificial intelligence capabilities to introduce next-gen user experience and enable comprehensive insights into the platform performance.
For lenders
AI-based prescriptions on loan application approval or rejection; intelligent portfolio analytics.
For borrowers
AI-supported chatbots to help borrowers navigate the platform and solve any operational issues.
For admins
AI-powered forecasting of P2P lending demand and financial gains from the platform operations.
Main Integrations for P2P Lending Software
Integrating your solution with the following systems can help streamline borrower credit checks, lending-related payment processing, and ensure accurate accounting for lending transactions:
To accurately record revenue data in the general ledger.
Additionally, the platform can be integrated with the accounting systems of lenders to enable them to automate recordkeeping of due and received loan repayments.
provided by banks or independent payment processors (e.g., PayPal, Stripe, BitPay).
- For seamless funds settlement.
- To instantly notify payers on payment success or failure.
Credit rating platforms
of the selected credit rating bureaus (e.g., Experian, Equifax, TransUnion).
- For data-driven assessment of borrower creditworthiness.
- For streamlined submission of credit reports.
For comprehensive platform analytics and advanced visualization of P2P lending reports.
Key Steps of P2P Lending Software Development
Custom P2P lending software development is a way for companies to introduce precise functionality their target audience needs and leverage advanced tech-based loan automation to drive high ROI.
Below, ScienceSoft describes the main steps we take to help P2P lending businesses design and launch a competitive lending platform.
1.
Analysis and requirements engineering
We analyze the needs of your target audience (borrowers and lenders), research the competition, and communicate with key project stakeholders to discuss the P2P lending platform vision. Based on the collected data, we define functional and non-functional requirements for the solution and possible competitive advantages that can help you win on the P2P lending market.
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2.
P2P lending platform conceptualization
With your unique requirements in mind, we design a feature set, architecture, role-specific UX and UI of the platform, as well as the integrations with the necessary internal and third-party systems. We also recommend the best-fitting techs and tools for platform implementation. If required, we can develop a Proof of Concept to quickly and cost-effectively test the solution’s technical viability.
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3.
Project planning
We determine project objectives, deliverables, schedule, and budget; we also identify possible project risks and ways to mitigate them. All that lays the basis for composing the project team and designing collaboration workflows. At this stage, we also assess economic feasibility of the platform and introduce detailed estimations of the expected TCO and ROI.
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4.
P2P lending software development
We develop the back end (including APIs) and front end of the platform and set up data storage. To ensure high quality of the solution, we run testing procedures in parallel with coding. We also establish DevOps environments (CI/CD, container orchestration, test automation, etc.) for streamlined P2P platform development, QA, and release.
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5.
Platform integration with the required systems
We integrate the P2P lending system solution with your existing software and third-party tools, and conduct integration testing.
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6.
Software release
ScienceSoft configures the platform’s infrastructure, backup and recovery procedures, and sets the ready-to-use solution live. We can also assist in creating a dedicated website to promote your P2P lending software.
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7.
Support and evolution (optional)
We offer continuous monitoring and support of the P2P lending platform to ensure its stable performance, compliance with relevant regulations, and ability to provide smooth user experience. As your business grows, we can evolve the platform by introducing new features and advancing its non-functional capabilities.
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Factors that Drive ROI for P2P Lending Software
Maximized automation of lending operations
To eliminate manual efforts across lending-related processes, save time for borrowers and lenders, and help win the larger audience.
A robust matching engine
To enable borrowers to easily find the most favorable loan offerings and help lenders define the most profitable investment opportunities.
Convenient UX and user-friendly UI
To increase platform adoption and ensure seamless borrower and lender journeys.
Easy-to-use APIs
To offer smooth platform integration with the lenders’ business-critical systems.
We Know Your Major Concerns – See How We Dispel Them
P2P lending software security
We power your solution with multi-factor authentication and AI-powered fraud detection to prevent unauthorized access and instantly spot malicious user activities. We also implement robust infrastructure security mechanisms (e.g., DDoS protection algorithms, firewalls, authorization controls for APIs, IDSs / IPSs, etc.) to ensure security of your IT system.
Regulatory compliance
Non-compliance with legal standards (e.g., PCI DSS, CCPA for the US, GDPR for the EU) may result in severe financial and reputational losses. We create P2P lending software with global and country-specific regulatory requirements in mind to ensure lending transaction processing and sensitive data storage in accordance with the relevant regulations.
Implementation Costs for P2P Lending Software
The major factors impacting the project cost are:
- Requirements to the functional capabilities of a platform, its performance, scalability, availability, and security.
- The number and complexity of integrations.
- The need to develop ready-to-use APIs to integrate the solution with end users’ systems.
- Requirements for the UX and UI for various user roles.
- The need to obtain and maintain legal compliance.
- The required development scope (PoC, MVP, a fully-featured solution).
- The chosen sourcing model (all in-house, team augmentation, or full outsourcing), team composition, tech stack, etc.
From ScienceSoft’s experience, a P2P lending platform development project of average complexity lasts around 9–15 months. The costs of custom peer-to-peer lending software range between $400,000 and $1,000,000+.
Want to understand the cost of your custom P2P lending software?
Implement P2P Lending Software with ScienceSoft
Having 18 years of experience in creating financial software, ScienceSoft provides a set of expert consulting and development services to help you implement a winning P2P lending platform.
P2P lending software consulting
We design a comprehensive platform to meet the most demanding needs of your target audience. You also get expert advice on security and compliance and a detailed launch plan with cost and time estimates for risk-free software implementation.
P2P lending software development
We handle all the aspects of your software development, including integration with the required systems and implementing robust security controls. You promptly get a reliable, secure, and user-friendly P2P lending platform that drives high ROI.
About ScienceSoft
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. We help P2P lending companies design and launch reliable lending marketplaces that bring high ROI. Being ISO 9001- and ISO 27001-certified, we apply a mature quality management system and guarantee that cooperation with us does not pose any risks to our customers’ data security. Explore ScienceSoft’s lending software development offering to learn more about our approach.