Is the collapse of the traditional banking industry imminent? Although this is a thoughtprovoking statement and numerous arguments could be made for its inevitable demise in the faceof the fast moving and highly innovative Fintech industry, the fact remains that the traditionalbanking industry still serves as the primary financial intermediary when it comes to almost all ofour financial needs. But what if this wasn't the case? The rise of the Fintech industry has broughtwith it a tidal wave of new innovations and technologies that have in more recent yearschallenged the traditional banking industries' unassailable position in the credit market. Onerelatively new phenomena in the Fintech industry is Peer-to-Peer lending (P2P). Is this newphenomena here to stay and can it possibly cause tremendous damage to the existing incumbent’sposition in the industry? For this study we decided to investigate the relationship between peer to peer lending and thetraditional banking industry in Sweden for a variety of reasons. Firstly, P2P lending challengesthe banks dominance in their most profitable sector which is lending. This is because P2Plending bypasses the banks role in this financial transaction, cutting them out as middlemen inthe lending process by connecting the lender and borrower directly. Furthermore, P2P lending isable to provide better interest rates due to lower operational costs as well as a faster loanapproval process as well as being able to target isolated and underserved customer segmentsthought to be outside of the banks risk parameters. These factors put together present a unique challenge to the banks in terms of competition anddisruption. Our research investigated whether or not the P2P lending platforms in Sweden did infact cause disruption to the traditional banking industry or if they were creating a separate marketindependent from the traditional banking industry. The purpose of our study was to illuminatethe relationship between P2P lending and the traditional banking industry in a developedeconomy in order to contribute to the ongoing debate about the impacts that P2P lending has onthe banking industry. In our research and through our empirical findings we arrived at some very interestingconclusions. The banking industry is indeed being challenged and slowly pushed out of theconsumer lending sector, although to attribute this solely to P2P lending would be incorrect.Furthermore, although all of the banks we interviewed agreed that P2P lending was not a threatfrom a strategic viewpoint, the argument could also be made that disruption is occurring asincumbent firms ignore the needs of those downmarket and as a result new entrants thentargeting these customer segments gain traction and eventually target incumbent firms mostprofitable customer segment. Our findings conclude that P2P lending has indeed causeddisruption in the traditional banking industry although the level of disruption caused by P2Plending specifically is still up to debate.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:umu-197056 |
| Date | January 2022 |
| Creators | Skoog, Karl Johan August, Tollnerius, Carl William Simon |
| Publisher | Umeå universitet, Företagsekonomi |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
Page generated in 0.0022 seconds