MADISON, Wis. (10/20/15)--Peer-to-peer lending presents credit unions with opportunities to provide services to new members and serve new markets, according to a new paper from the Filene Research Institute.
The peer-to-peer lending market has major disruptive potential, according to the paper “Peer-to-Peer Lending and the Future of Cooperation.” Instead of going to a bank or credit union for business capital, a 25-year-old entrepreneur can turn to online-enabled crowdfunding platforms.
These platforms allow large numbers of people, often strangers, to pool their financial resources to achieve common goals and finance everything from new consumer products to feature-length films, charitable causes and, most recently, consumer loans.
There are thousands of crowdfunding platforms, each using a unique business model and financing strategy and targeting a different and increasingly specific niche.
Most credit unions have the capacity and risk tolerance to engage in crowdfunding-enabled community operations. These projects are relatively low-cost and have high social impact. Of particular interest is the possibility of reaching out to young, value-driven consumers and exposing them to the credit union alternative.
Credit unions overall have an aging membership base so the opportunity to attract younger members is compelling, as is the risk of losing high-risk potential members, the paper said.
The paper explores the crowdfunding market, regulatory risks, borrower risks, market opportunities, and makes recommendations on how credit unions can become involved.