The last decade has witnessed an exponential surge in the online social community that has revolutionized communication across boundaries. Integrating social networking with financial services has given birth to peer-to-peer (P2P) financing. P2P financing enables both borrowers and lenders to interact on the same platform connecting users online. Instead of a bank intermediating between savers and borrowers, the two parties deal with each other directly.

Getting loans from individuals without any intermediary is the fundamental essence of P2P financing. Lenders are better off with higher interest incomes, borrowers with cheaper sources of fund and market makers with a deal fee. It ushers in the opportunity for the democratisation of finance, as investors get to decide whom to invest in and borrowers get to negotiate interest rates. However, the lender’s investment is not protected by any guarantee.

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