With the aid of fintech, this study seeks to undertake a systematic review of peer-to-peer lending literature. In this chapter, the authors learn how fintech has aided peer-to-peer lending and how it has facilitated the provision of services like simple credit, the recording of borrower information, etc. Additionally, they examine the development of fintech, and the findings of this study demonstrate that COVID-19 has significantly altered the primary determinants of P2P lending. According to the findings, P2P fintech financing is now the most practical alternative credit option available to borrowers. Because they highlight the value of P2P lending platforms, their potential advantages, and the causes of defaults that do occur, the findings are significant and are likely to be of interest to investors, practitioners, academics, and legislators. The authors also learn about the evolution of the traditional lending system.
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The role of innovation in improving work processes cannot be overstated. While there have been numerous technological advancements lately, today focuses on “Fintech.” This term, derived from the words “finance” and “technology,” refers to using technology in financial services. The financial sector is crucial to society and has undergone significant changes, leading to the advent of the “fintech” era. Despite its trendy nature, Fintech is vital in enhancing financial services, making previously exclusive services, such as loans, payments, and deposits, more widely available. As such, it is vital to understand Fintech as it will become increasingly pervasive, potentially replacing traditional banking methods. Many companies, including banks, have already incorporated Fintech into their systems, with chatbots being an excellent example of how it can provide customers with convenient problem-solving options at home.
Robot advisors are more cost-effective, transparent, and require less human interaction (Faloon & Scherer, 2017), making Fintech increasingly popular, particularly in the banking industry (Thakor, 2019). Fintech covers various financial services, including credit deposits, peer-to-peer lending, cryptocurrencies, and insurance. Fintech has made financial services more accessible to the public, with virtual wallets like Apple Pay allowing users to apply for loans and make payments without leaving their homes. Banks are concerned about the rise of Fintech, as services such as peer-to-peer lending may replace traditional banking methods. Similarly nature of investor has also changed over a period of time (Mehta & Sharma 2015). However, banks are more trusted than Fintech, especially for p2p lending, which usually deals with high-risk borrowers to whom banks are unwilling to lend money.
Cryptocurrency is another new term that has emerged with the rise of Fintech. It was created in 2009 and allowed anyone to buy cryptocurrencies like Bitcoin without the assistance of a bank. Blockchain technology stores the purchased cryptocurrency digitally, removing the need for banks. In addition, blockchain technology ensures that transactions are secure and verified. Although the cryptocurrency market has grown, it is run by a decentralized system, leading to risks (Catalini & Gans, 2016; Cong, 2019; Thakor, 2019; Trivedi et al., 2021). While Fintech and cryptocurrency are changing the payment system, digital currencies such as Bitcoin are unlikely to replace cash. Therefore, banks must focus on innovative technologies like p2p lending to keep up with the market and cover the services that Fintech provides.
With a growing understanding of Fintech, more people are downloading finance apps, mainly due to the COVID-19 pandemic, which has increased people's awareness of how they can stay financially healthy (Arora et al., 2022). Lockdowns and social distancing measures have forced people to stay home and made them wary of physical interaction, leading to a surge in finance apps like payment apps. Bank transactions have also been conducted online, and various Fintech technologies have been developed to support this shift (Fu & Mishra, 2022). People are moving towards Fintech due to the global financial crisis and a loss of trust in traditional banking methods (Goldstein et al., 2019; Fu & Mishra, 2022). The demand for lending apps is growing as people exhaust their savings and must borrow money to make ends meet.