At some point in life, almost everyone faces a shortage of money. This can happen due to varied reasons, like the sudden loss of a job, poor money management, economic crisis or other unexpected circumstances in life. For example, the COVID-19 outbreak resulted in sudden job loss for 114 million people in the world.
Therefore, in such scenarios, people want to borrow some money which they can pay later once things come back to normal. Banks provide several kinds of loans which is one of the primary options for people to lend money. However, it is not easy to get bank loan approvals. Most of the applications are rejected for several reasons.
But, the days of waiting for banks to approve personal loans are no longer the only options to borrow money. There is no doubt that all the banks provide personal loans, which is very useful for people. But it is not easy to get loan approval.
In many instances, people need to wait for the bank’s response, submit and prove all the collaterals, remain in a long queue, make unnecessary and multiple visits to the bank, or find an agent to get the approval. Even after all these efforts, a majority of people don’t get a loan.
However, things have changed now with the advent of modern technologies and systems that provide plenty of easy options to find a loan in less time. There are peer to peer (P2P) lending apps that make the lives of people easier who need to borrow money.
What these peer to peer lending apps do is connect the people who are interested in giving the loan with the people who want to borrow money. Once both parties agree, the loan is approved instantly. There is no involvement of banks or financial organizations.
But what is a P2P money lending app? How does it work? What are its benefits? How to make money peer to peer lending? How much does it cost? In this comprehensive article, we have answered all these questions, along with reasons to develop a peer to peer loan mobile app, and critical features required for it.
A P2P money lending app is a platform that brings together money lenders and borrowers. Both the lenders and the borrowers are equal parties. The platform doesn’t involve other intermediaries like banks, financial organizations, loan brokers, etc.
The money lenders and borrowers are the users of a peer to peer loan mobile app. Unlike banks, these apps don’t have an extensive physical infrastructure all around the region or country, and there are no staff salaries to be paid. Other additional expenses like the computer, software, etc., are also optimum. Because of these reasons, the rate of interest for loans is also lower as compared to banks.
The working of a money lending app is quite simple. The app hosts two types of users: one who can lend money and another who wants to borrow the money. For providing money as a lender and taking money as a borrower, here is how the app works:
Money lending apps are an alternate way to find loans for people who want to borrow money. These apps provide several benefits to both borrowers and lenders. The borrowers get the needed amount and repay in instalments. Whereas, the lenders find it as a way of investment by earning interest on the principal amount.
The market for peer to peer loan software or app is rapidly growing. Here are some stats that prove the point:
These statistics prove that the demand for P2P money lending apps is growing at a fast pace. If you are thinking to create a peer to peer lending platform, then this is the right time for you to bring your idea to life.
Following are the primary features that you must have in a P2P loan mobile app:
Before you bring your idea to action, it is crucial to know about some key factors that can cause risks to your platforms if you don’t take care of them.
You have to follow and abide by the rules and regulations set by the government of your target region. There are certain activities, governance, laws, business continuity plans, customer interface, etc., that can’t be ignored.
To prevent fraudulent activities, it is crucial to have a verification process in place for borrowers. You can ask borrowers to submit some documents of proof, like government-issued IDs, tax return, bank account details, etc.
If your app is for a particular country or region, then your app must meet all the required regulations for that region. In case you are targeting an international audience, then there are many other laws and regulations to comply with.
For instance, your app must comply with General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA). What these regulations do is provide users with the right to be informed, access, rectify, delete, or restrict the data and information that they submit or your app accesses.
Since the money lending business involves financial transactions and risks, you must have a skilled lawyer who can handle the legal issues in case things go wrong. Moreover, the lawyer can keep you informed about the legal procedures required for such businesses.
Along with a lawyer, you also need to hire a financial expert. He will take care of the policies and procedures required to meet financial regulations. The person should be experienced and skilled in all aspects of the finance and loan business.
You need to collaborate with a bank for yourself. There will be a need for many banking services to keep your app running, which can be provided only by a bank. Numerous transactions will happen on the app, along with deals with investors. For this purpose, you can choose to partner with multiple banks if needed.
Having security tools to prevent and fight cyber threats and illegal activities is a must for your app. Ask your app development company to integrate all the required security practices, such as SSL certificate, strong passwords, and advanced tools that can mitigate modern cyberattacks.
Here are the essential steps for P2P money lending mobile app development:
1. Study target audience and market: The process will start with the groundwork of researching the market and the audience you want to target. You need to understand users’ perspective, challenges, and requirements in your targeted market to ensure that the app achieves success.
Find the top competitors in the market, download their apps, analyze their operation, and find their positives and negatives. See the app reviews to understand what users are expecting, which is lagging in the applications of your competitors. This will help you to include some additional functionalities and create some Unique Selling Points (USPs).
2. Choose platforms: Will your P2P money lending app be available on Google Play Store or App Store, or both? During the research, you should find the number of Android and iOS users in the targeted region. Based on this, you have to choose the platform to develop your app.
3. Finalize features: There are already several similar apps available in the market. You need to integrate some advanced and unique features along with the essential features. Remarkable and valuable features that can make things more convenient for users will help you compete in the market.
4. Find app development company: For app development, you need to find a team of app developers who can work on your ideas. You can find a reliable app development company that has experience in developing financial and money lending apps. Discuss your requirements, features, technology stack, etc. Additionally, ask them whether they will handle the UI/UX design, testing, and app maintenance as well. This will save you from going for multiple companies for a single app.
5. Testing: Once the app has been developed, the next stage is the testing. Here, the team of testers will look out for bugs and flaws that remained during the development phase. It is crucial to fix all the bugs so that the app users don’t find it difficult or challenging to use it.
Coming to the final question: how much does it cost to develop a P2P money lending app? The total cost of the app development will depend on several factors. These include:
On average, the peer to peer lending software cost will be somewhere between $20,000 to $45,000.
Hope this comprehensive guide on peer to peer loan lending app development helped you understand all the aspects you need to know. Undoubtedly, this is a profitable business idea that is in demand. If you have more questions related to it, feel free to get in touch with our team or share with us using the comments below.