Definition P2P (Peer-to-Peer) Lending is a method of borrowing and lending money directly between individuals, facilitated by online platforms, without the need for traditional banking intermediaries. This innovative form of financing provides a marketplace where borrowers can request loans from multiple lenders, who can choose to fund all or part of those loans.
Components of P2P Lending The P2P lending landscape includes several critical components:
Borrowers: Individuals seeking funds for personal or business use.
Definition Regulatory Technology (RegTech) refers to the innovative use of technology to improve and streamline compliance processes in the financial sector. It incorporates tools designed to monitor, report and ensure adherence to rules and regulations while minimizing operational costs and complexity associated with compliance tasks. RegTech represents an intersection of finance, technology and regulatory affairs, addressing the growing demand for regulatory compliance, especially with evolving regulations and market complexities.
Definition Robo Advisors are automated investment platforms that provide portfolio management and financial planning services using algorithms and artificial intelligence, with limited human interaction. The primary function of Robo Advisors is to create and manage diversified investment portfolios based on the investor’s goals, risk tolerance and time horizon.
Components of Robo Advisors Algorithmic Portfolio Management: Robo Advisors employ algorithms to automatically manage, rebalance and optimize investment portfolios based on market conditions.
Definition Smart Contracts are self-executing contracts where the terms of the agreement or conditions are directly written into lines of code. They reside on a blockchain network and automatically execute or enforce the agreement once predetermined conditions are met. This can include transferring assets, issuing payments or updating records—all without the need for an intermediary, resulting in increased efficiency and reduced fraud risk.
Components of Smart Contracts Code Base: Smart contracts are constructed using specific programming languages suited for blockchain technologies, such as Solidity for Ethereum.