Money lending platforms have emerged as a new and exciting way for people to access personal loans.
Traditional money lenders have also seen the significance of this growing segment.
They are now venturing into P2P lending, albeit slightly different than most other players in the financial services industry.
The money lending platform provides an intermediary between borrowers and lenders and offers them opportunities to invest in these personal loan offerings.
Let’s take a look at how Chime has built its platform and some of the benefits they’ve gained from doing so.
To build a successful money lending platform, you need to understand your target audience, review your business plan, and find potential investors.
This article details everything you need to know about creating a money lending platform from start to finish.
What Is a Money Lending Platform?
A money lending platform is a digital, peer-to-peer (P2P) lender that matches borrowers and lenders based on interest rates, borrowing amounts, and other criteria.
This platform type is called crowdlending or P2P lending (sometimes referred to as a crowdfunding site because it allows many people to fund loans).
A money lending platform connects borrowers who need a loan with lenders with capital that they’re looking to invest.
These platforms are primarily online and are designed for both individuals and businesses.
When you create a money lending platform, you’re essentially creating a marketplace for lenders and borrowers to come together and interact.
In some cases, you may also act as the lender and take a risk in providing personal loans to borrowers.
This can help get your platform off the ground, but it’s something you’ll want to stay away from long term.
A Brief about Chime Mobile App
Chime is a financial technology company rather than a bank. Millions of users rely on it to start immediate transactions.
The software enables users to check their account balances and manage spending with only a few touches.
It is available through more than 60K fee-free ATMs found at Walgreens, CVS, 7-Eleven, and other locations, and it doesn’t impose any hidden fees for any transactions.
The benefit of developing a mobile app like Chime
Some benefits of developing mobile apps are;
After a withdrawal or payment, users no longer have to wait days or even hours to check their bank balance. It is immediately reflected, increasing users’ perceptions of transparency and reliability.
2. Safeguards Users from Fraudulent Activity
Hackers are constantly posing a threat to online banking activities. To prevent unwanted access and attempts, a secured banking app will contain two-factor authentication and other security extensions.
3. Faster Transactions
Everything would be done at the touch of a finger. There wouldn’t be any more lines to start transactions, withdraw money, or perform other banking-related tasks. Online methods would make the process easier and more efficient.
Various Types of peer-to-peer loans
P2P loans were initially offered as unsecured personal loans that didn’t require collateral and could be used for any legitimate purpose.
Personal loans continue to be the most popular and versatile P2P loans. They aren’t the only ones, though. Let’s examine the three primary categories.
1. Peer-to-peer Financing for Personal Loans
P2P personal loans can be utilized for various expenses, including debt reduction, car purchases, house improvements, trips, and other sizable purchases.
They function exactly like a personal loan from a conventional bank or other financial institution, with the obvious exception that private individuals fund them.
2. Student or Educational Loan Lending Between Peers
P2P student loans are frequently provided in lump sums so that the borrower has flexibility in how to allocate the funds towards educational costs.
Even though employing government student aid alternatives is preferable before looking into other loans, P2P lending sites can provide student loans with affordable interest rates.
3. Peer-to-Peer Lending for Business Loans
P2P loans can help small and startup business owners expand their enterprises and improve their chances of receiving funding.
They might use P2P revenues to hire staff members, develop new products, or market.
On these P2P websites, business borrowers have access to a wide range of lenders, which can be highly alluring.
Popular P2P lenders
P2P lending is a growing sector of the economy.
According to information from IBISWorld, the P2P lending market will be worth close to $938.6 million in the United States in 2022.
Although the number of P2P lending platforms is expanding, these 6 lenders presently represent some of the most recognizable brands in the industry:
- Funding Circle
Why Build a Money Lending Platform?
There are many benefits to building a money-lending platform, including
If you’re an individual who wants to make money by lending cash, there are many platforms available where you can do that.
If you’re an individual looking to invest in loans and make money (with a bit more risk), some platforms allow you to do that.
If you’re an individual looking to borrow money, you can also do that on some money lending platforms.
Money lending platforms are often online and allow individuals to apply for a loan anytime, from anywhere.
5. Variety of Options
Depending on your risk tolerance, you can select from different types of loans and investment opportunities.
6. 24/7 Availability
Money lending platforms are open 24/7 and provide borrowers and lenders with a larger selection of options.
Factors To Consider Before Building A Money Lending Platform Like Chime
Some factors to consider while building a money lending platform like chime
Step 1: Define Your Audience
At the outset of this process, you need to define your audience.
Q. Who is going to use your platform?
Q. What are their needs and expectations?
Q. How do they use and interact with their current financial providers?
Q. How can you provide them with a superior experience?
As you define your audience, you’ll also gain insights into potential problem areas where you can provide solutions.
Defining your audience can be challenging, but it’s an essential process. You don’t have to have a perfect understanding of who your target customers are from the get-go.
As your business grows and evolves, you can expect to change your definition over time. But you do need to have a general understanding of who you’re trying to reach.
Step 2: Prove the Demand for Your Idea
Building a money lending platform is an ambitious undertaking, and you will want to ensure there’s a demand for your services. This can be tricky to determine, but there are a few ways to go about it.
Surveys – Surveys are a great way to understand your audience’s thoughts and feelings about your idea. You can either do this through an existing survey that you can find online or create your own.
Make Focus Groups –Focus groups are great, especially if you can get a few people together to represent your target audience. This will allow you to have more in-depth conversations about their needs and experiences.
Use Tools like Google Trends – If you have a general idea of what you’re trying to get a gauge on, Google Trends can help provide data and insights into potential demand for your services.
Step 3: Review Your Business Plan
Building a business plan for a money lending platform is essential for its success.
The plan will help you outline your overall strategy, identify potential challenges and risks, and map out the best course of action for overcoming these obstacles and hurdles.
When reviewing your business plan, remember that your money lending platform is both a product and a service.
You’ll be providing a platform where people can come together and interact and other added benefits, such as credit scores and analytics.
As part of your business plan, you should also include a marketing strategy outlining how you plan to bring new users to your platform.
Remember that marketing your money lending platform can be challenging at first because you’re not offering a tangible product that you can ship and sell.
This is why marketing is an essential part of your business plan.
Step 4: Find Potential Investors
Building a money lending platform is an arduous process that requires significant capital.
You’ll want to find potential investors as soon as possible, especially if you plan on building your platform from the ground up.
You can find potential investors in a few different ways, including:
Cold calling – Cold calling is a great option if you don’t have the time or energy to host an event. Remember that a cold call is best done during normal business hours to avoid waking anyone after hours.
Hosting an event –A great way to find investors is to host an event, such as a pitch competition or seminar. This will allow you to get in front of potential investors face-to-face and pitch your idea.
Features To Add To Your Money Lending Mobile App
Here are some of the features that you can add to your money-lending mobile app
1. Transactions and Balance
The mobile application should be able to display recent transactions rapidly. It is a fundamental prerequisite for creating a mobile banking app. Identify for users the name and type of transactions they’ve started using the app.
2. Keeping Track of Expenses
Mobile banking apps should let consumers keep track of their ongoing expenses. They should be able to use it to divide their spending into several categories, such as entertainment, eating, and shopping.
3. Helping Consumers Deposit Checks
It is something you should do using the mobile app you create. Allow users to take and submit pictures of both sides of the checks they want to present for clearance.
4. Card Management
Users today often utilize a variety of credit and debit cards. They should feel comfortable managing their cards through the mobile app; they can link cards to other accounts, manage PINs, and do many more things.
We all enjoy the convenience of paying our phone and power bills, among many other bills, while seated on our couches. These are feasible if the mobile banking app allows money transfers from one service provider to another.
6. Message Alerts
The application should alert the user via notifications or message alerts whenever an activity is started in their banking account. They should also be informed of scheduled transactions, deposits, or changes to the account balance.
7. Biometric Authentication
It is a key requirement for mobile banking applications. Fingerprint authentication, Face-ID sign-in, two-way authentication, and other methods should all be supported by the increased security feature.
8. Voice and Chatbot Assistance
The mobile banking app you create offers voice and chatbot assistance. You can relieve some of the time-consuming chores by automating the customer-help process using chatbots and voice support.
How Long Does It Take To Develop A Mobile App Like Chime?
If we had to estimate, it would take 4 to 5 months.
This would involve thinking of a well-thought-out concept, quality assurance, prototyping, developing the MVP, and releasing the finished product.
Once more, this is a unique phenomenon and may vary based on several circumstances. The cost of developing a mobile banking app is between $20,000 and $25,000.
However, it is crucial to discuss these advertisements in person so that we can assess your needs and provide you with a strategy in line with them.
Building a money lending platform is an exciting endeavor, but it’s important to take the right steps to ensure you’re successful.
To start, you need to understand your audience, prove the demand for your idea, review your business plan, and find potential investors.
When you know what you’re doing, it’s possible to create a money lending platform that benefits both borrowers and lenders.