Peer to Peer lending, also known as crowd lending, is a model that allows individuals to directly obtain credit from other individuals thus enabling them to bypass any financial institutions acting as intermediary.
But these lending models are now undergoing a gradual shift to make the process more effective and transparent for both the lender as well as the borrower. One of the major pain points that the borrower faced while availing a loan on a P2P platform was the disbursement cycle. This is where Elfin, a UK based peer to peer lending platform has come up with an innovative solution.This P2P lender platform is a ll set to launch physical credit cards that enable the borrower to withdraw money from the pre-approved loan whenever they are in need.
This effectively eliminates the waiting time that the borrower had to endure for each disbursement. It and effectively gives him access to the entire loan amount and make transactions on-the-go, without having to seek approval for every disbursement.
While the interest rate on the card and the credit limit still depend largely on the borrower’s credit worthiness, Elfin is still able to offer borrowers a cheaper rate than traditional credit cards. This is due to its ability to provide borrowers direct access to their loan amounts through Elfin purses, without having to transfer the money to their bank accounts, thereby eliminating the need to use banks as middlemen.
Thus, by reducing the turn around time and providing borrowers a method to obtain affordable credit, Elfin is now set to disrupt not only the P2P lending market, but also the credit card market.
Source: Business Insider