The end of P2P boom?

Weeks ago, another peer-to-peer (P2P) lending crisis happened in China - one of the country’s top P2P lending platforms collapsed, causing 220,000 investors losing 14.5 billion yuan. In 2018, the growth of China’s P2P lending sector dramatically reversed: 1,407 internet platforms that offered P2P lending services were shut down due to tightening regulation between July 2017 and June 2018, indicating the end of the P2P boom in China, according to China Fintech Today.

 

In Malaysia, how has the sector performed?

According to Kristine Ng, CEO of Fundaztic, P2P in Malaysia has been driven largely by younger users, up to 59% of its investors are under 35. She thinks that the Millennials are open to investing, even if they don’t have much money. She believes younger investors have less preconceptions about what to invest in and are more connected on their phones and computers when it comes to investing, often even outpacing automated buyers.

Malaysia’s P2P Lending Performance

There are six P2P licensed lending players in Malaysia. The market share of funds raised by each operator from Nov 2016 to Jan 2018 is shown below:

P2P Lending Malaysia – Market Share of Funds Raised by Operators (Nov 2016- Jan 2018)

Source: FintechNews Malaysia

Currently, the largest P2P Lending platform in Malaysia - Funding Societies, has successfully funded up to RM1.63 billion in total. As on 24 April 2019, its default rate is 0.86%. On the other hand, B2B Finpal has funded RM76.3 million with 0.18% default rate, whereas Fundaztic has funded RM45.3 million with 4.39% default rate.

Although default rates of most of the P2P lending platforms remain low, complaints on late or missed repayments can often be seen on forums. Investors should remember that any investments will carry risks.

Reference:

China Fintech Today: The P2P Boom Is Truly Over, SARA HSU, 27 Feb 2019

P2P financing is booming in Malaysia, Qishin Tariq, The Star, 28 Nov 2018