An open letter from a lender to different online p2p lending sites

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I come from a background of traditional p2p lending and so have been genuinely excited and spending lot of time in researching different p2p platforms with full intention of investing through them. Unfortunately however I haven’t been convinced so far to invest money with any of them.
To me it looks like the management teams of these platforms don’t have ppl who have experience in traditional borrowing/lending and seem to have experience in how banks/big financial institutions lend.
1) Typically in traditional p2p lending, only intt. is paid every month and principal is paid in one shot or in few shots as per borrower’s convenience. This way lender earns more in absolute terms and borrower also is not burdened. But these platforms deploy EMI method used by banks which results in low absolute returns for the lender. Further the amount of lender gets broken and borrower also is burdened.
2) Biggest problem is of default/delay. The only answer to this from platforms is to diversify but at individual level even if a lender lends to 10 ppl and even if 1 person defaults, it would be 10% and the portfolio will go in loss. This diversification can work only at very large numbers which is difficult to achieve at individual level. My guess is that at present, all loans on most of the platforms may be barely sufficient for diversification benefits to kick in
3) And in continuation of 2nd point above, when a default/delay is there, platform just washes it’s hands off and lender is on its own. In no other marketplace such a thing happens be it e-commerce or food delivery. If anything goes wrong, for the customer it’s the marketplace that is answerable and marketplaces do stand up and take responsibility.
It’s so difficult for an individual lender to pursue legal cases/recovery methods. The actions that a platform can take by leveraging its size/capability/connections and thereby increase chances of successful recovery, an individual can only dream of. Infact, this information that it is only poor lender who is all alone to recover his/her money may further tempt a borrower to default. While if a borrower knows that if he/she defaults/delays the platform will come after him/her with full force, it may itself act as a deterrent.
Perhaps a hybrid hedge/VC fund type approach needs to be taken.
All money from lenders is collected in a common fund (can be a liquid mutual fund so that while capital is waiting to be lent, at least it continues to earn FD rates). The platform itself should contribute a non-insignificant amount to this common fund to further build credibility.
All borrowers may be classified into different risk categories (say A to E) and then say it be decided that 50% funds would be invested in category A borrowers, 20%. in category B and so on by the platform by doing proper risk analysis.
As a borrower comes, the borrower gets money from the common fund and who all lenders at that time have their funds in the common fund become lenders to that particular borrower. Having money already taken from lenders and making it available in the liquid fund will also ensure faster disbursal.
Any defaults/delays and the platform takes up on itself to recover. In the end lender’s earning equals
Liquid fund returns + lending returns’ – defaults – platform expenses
where
lending returns’ = actual lending returns – platform cut
This platform cut becomes profit of the platform rather than the petty fees that they charge.
This way in the long term, the platform with better returns, low expenses,  win.

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