Crowdlending vs. Banks loans?

Person who wrote the post admin Aug 25, 2017
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The banks traditionally have a transformational function in which they carry out the maturity and lot size transformation. Since deposits and loans usually do not have the same terms and amounts, the bank takes on this transformation function by taking in and issuing loans. The Crowdlending platforms only perform the lot size transformation function because, by definition, small amounts of lenders stand in the way of a higher amount on the borrower side.

Unlike banks and lending institutions, the profit from the interest rate difference is not part of the business model. This means that in Crowdlending the interest rate, which the borrower pays 1: 1, is forwarded to the lender. For banks and credit institutions, there are usually significant differences between deposits and lending. Especially in the 0% interest rate environment, savers receive little interest, while borrowers have to pay up to 9.9% interest (for existing contracts before the reduction of the maximum interest rate to 10% even up to 14.9%). With Crowdlending, interest rates of less than 4% are possible, depending on the creditworthiness of the debtor, although here too, lenders can still achieve a higher return than on the bank account. The disadvantage is that funds are tied up and cannot be retrieved at any time. This is softened in Crowdlending that the borrowers pay off the loan usually in monthly installments, with each month a portion of the loan flows back to the lender.

Generally, banks and crowd lending have a different business model. Banks are not replaced by Crowdlending, but the model offers a fair model that benefits both lenders and borrowers alike. From this perspective, we are convinced that this form of lending will establish itself.