Everyone’s life will come to a point where they will run out of money. While money lending is not a new notion in the industry, the growing influence of digitalization has successfully transformed the loan lending process. People no longer like to borrow money from banks or credit unions because they have complicated procedures. Still, they also don’t have time to visit banks to fulfill the formalities in their busy lives.
The pandemic’s devastating impact has pushed people into financial crises around the world, but social distancing has also increased the number of people who prefer lending platforms that provide credit more quickly and easily without involving banks, loan brokers, or financial institutions.
Understanding the Basics of a Peer to Peer (P2P) Money Borrowing App
A peer-to-peer (P2P) money lending app is a loan lending platform that connects lenders and borrowers. Both the lenders and the borrowers are equal partners in this sort of money lending app. There are no intermediaries such as banks, financial organizations, loan brokers, etc.
Moneylenders and borrowers are the primary consumers of peer-to-peer loan mobile apps.
The best thing is that these applications provide quick, brief, and lightning-fast money loan methods. Because their applications, unlike banks, do not have a large physical infrastructure and everything is controlled online, their interest rates for lending money are lower.
Why Is It a Good Idea to Invest in a Peer-to-Peer Money Lending App?
The adoption of digital money lending is gradually displacing traditional banking methods; nonetheless, if you are considering entering this highly competitive yet lucrative sector, now is the time to learn the secret to success. So, before you jump into hiring a mobile app developer, do some research on the market.
Things To Think About Before Making A Money Lending App
While it is true that money lending software like GAD – Bad Credit OK platform is far faster and more efficient than traditional banks or financial institutions, as the owner of the loan lending platform, you must adhere to the following rules and regulations:
Following the rules and regulations of the government
To handle any money lending application, make sure you follow all applicable government rules and regulations, which should include only approved operations, a regular business continuity plan, and a client interface, among other things.
Cooperation with financial institutions
You’ll need to select a banking partner for your app to ensure that any banking financial transactions go successfully. If you want to negotiate some unique features for your company within the app, you’ll need to engage an app developer who can tailor the features and upgrades.
The Verification Process for Borrowers
To avoid such fraud, you should establish a reliable system for verifying the borrowers’ backgrounds. You can use the following strategies:
- A government-issued photo ID,
- The verification of income procedure,
- A copy of your tax return,
- Account information from the past,
- Phone number verification
Users have basic rights under the General Data Protection Regulation (GDPR), including the right to be informed, the right to access, the right to restrict processing, the right to data portability, and more.
PCI DSS (Payment Card Industry Data Security Standard) Certification
Ensure your app has the PCI DSS (Payment Card Industry Data Security Standard) certification to conduct secure and safe bank transactions using credit cards or debit cards.
After all, let’s imagine you’re ready to begin hiring a mobile app developer.
But the main question is: what features and functions do you need to include to create a P2P money lending app?
The Most Important Features and Functionalities That Will Make Your App a Huge Success
While creating a money lending app is not a new concept, the current environment has increased demand for these apps. You may dominate the industry by incorporating unique features and functionality into your money lending app.
User Registration/Sign up
Make sure your app offers this function and allows users to register as borrowers using their email address, phone number, and password, just like other apps.
Borrower’s Certification Procedure
A two-factor authentication procedure is a must-have feature for most apps, but it’s even more critical for a finance-focused app. The two-tier verification method will increase the security of your app, preventing security breaches and unwanted login attempts.
This is an important feature that allows users to enter personal information such as name, phone number, age, nationality, and area.
Bank Account Linking
For smooth transactions, borrowers must provide their account information to instantly deposit funds into their bank account once the loan is approved.
Apply for a Loan
You’ve listed the different types of loans next to the action button so that borrowers can quickly fill out the form and provide you with all the information you need.
Credit Score Analysis
Include a feature in your app that allows users to check their credit scores by simply entering their information. So, before asking for a loan, the scores will be put to the borrower’s profile, and money lenders will be able to make a bidding decision based on that information.
To use this function, you’ll need to install “Credit Score API,” which makes the borrowers’ computations easier and more seamless.
Users will receive in-app alerts or notifications regarding loan deals available for specific sorts of loans. It’s also a helpful feature for reminding the borrower of his loan application’s status.
You can engage a software developer to include this function to detect the user’s location, or you can ask them to manually enter the user’s address to find out where he is.
To return the loan, make sure you use a variety of payment methods and gateways, such as debit/credit cards, e-banking, and so on.
Allow the borrower to calculate the EMI based on the amount of loan he wants to apply for and the selected number of months to repay before filing the loan application.
This offers customers an indication of how much EMI they’ll have to pay each month and the length of the EMI and the interest rate.
How Can You Make Money With A Money Lending App?
No matter how good your app idea is, if it does not generate revenue for your company, it is a complete waste of time. Here are some examples of typical monetization tactics for peer-to-peer lending platforms:
- Origination Fees: If you’re planning to build a money lending app, this is a good monetization approach to use. You can charge a service fee ranging from 1% to 6% of each loan, in exchange for the platform screening the borrower’s credit scores to avoid further disputes.
- Transaction Fees: As the proprietor of this peer-to-peer money lending software, you can deduct 1 to 3% of each loan payment as a transaction fee.
So, now that you’ve learned about all of the major aspects of developing a money lending app, you’ve decided to build a P2P money lending app for your company. You’ll need to hire a mobile app development company with a team of designers, skilled developers, testers, and other major experts to help you launch a perfect app. A professional team of developers will be at your side from planning, designing, development, and deployment, no matter how complex your app idea is.