While our economy is increasingly becoming digital, getting a loan still requires the old-fashioned steps of physically visiting a bank, filling out paperwork, and waiting for approval. Credit card use is possible, however, card limits are very low.
However, there is no need to worry, as there are now viable options available to you. You can borrow or lend money from the comfort of your home thanks to money lending apps.
It was estimated that by 2022, the lending market’s total transaction value will reach $344,421 million. This number explains why these applications are becoming so popular in the FinTech industry. This post will dive deep into the world of mobile money lending apps and guide you on how to create a money lending app.
P2P Money Lending App: Overview
Without the intervention of traditional financial institutions like banks, loan providers, brokers, etc., a “peer-to-peer” (P2P) lending application allows you to make and take out loans from other individuals directly. Peer-to-peer (P2P) lending is conducted through specialized fintech apps or websites in which users act as both lenders and borrowers.
Lending is often done by individuals, but in some cases, businesses may also be able to get in on the action. These procedures can use either a predetermined interest rate for the loan or a reverse auction to determine the rate. In a reverse auction, borrowers will disclose the highest interest rate at which they will accept a loan, and potential lenders will compete to offer lower rates.
Start With A Business Registration Form
It’s up to you to decide how to incorporate a business. There are different kinds available, and it’s up to you to figure out which one is best for your company’s needs. If you form an LLC, for instance, you’ll need to take steps to shield the company from creditors in the event of force majeure or insolvency.
When comparing LLCs and corporations, you should be aware that the latter has fewer reporting and accounting requirements. Profits and losses in an LLC are dispersed in accordance with the operating agreement, while in a corporation; distributions are made based on each shareholder’s percentage of ownership.
Business Name Registration
Due to the fact that it is a financial institution, it must first be registered as a business entity before any services may be rendered. To avoid breaking the law, you must adhere to all restrictions. Don’t forget to ensure that your company’s name is distinct from those of other P2P loan lending app businesses.
You will need seed money, just like any other startup, to begin working on your application. You’ll also need money if you want to offer loans through your app. You have several options for financing your business, including an Initial Coin Offering (ICO), venture capital, or a loan.
UI and UX design
The user interface of your peer-to-peer lending application should be simple. The less complicated it is, the more at ease its consumers will feel using it. Therefore, the most effective tactic would be to incorporate all necessary functionality, design an intuitive interface, and avoid overwhelming the user with an abundance of icons and images.
The first step in attracting more visitors and customers is to launch a website. A mobile loan app for either iOS or Android should be developed next. Assuming you have access to a big group of programmers fluent in a variety of languages, you can create anything from scratch.
However, working with a custom mobile app development company is the most time- and cost-effective approach to creating a new app. Everything from initial design to ongoing maintenance will be handled by them.
Other Important Considerations
Seek Legal Representation
A lawyer is unnecessary for many different kinds of businesses. However, a competent attorney who is versed in the law is an absolute necessity in the money lending industry. If you don’t know the law, you could end up in court for something that wasn’t even intentional.
Find Qualified Financial Help
You’ll need more than just lawyers to make sure your organization is in compliance with financial standards; you’ll also need financial experts or grizzled professionals to keep an eye on all of your policies and processes.
This individual should have an extensive background in the banking industry, specifically in the area of loans, and should have worked there previously.
Prepare A Loan Contract
If you’re starting a peer-to-peer money lending business, you should probably start thinking about writing out a sample loan agreement right away. All of the app’s T&Cs are mandatory reading for users.
Financial standards and regulations imposed by the government must also be met. Once again, you’ll need the help of accountants and similar professionals.
Get Together With a Financial Institution
One further factor to think about is the bank you’ll have to work with. You, your investors, and your debtors all need the banking services provided by this institution. If there are problems with your loan, the bank will assist you to work through them, too.
Working together with several financial institutions is also possible. You can form a partnership with them, which will have several benefits for you. However, the preliminary costs would be high.
Think About the Laws in Your Country and Abroad
If you want to create a product that may be marketed in multiple countries, you must follow all applicable regulations. When making a lending app, you must research how to meet all legal requirements.
The app should be prepared to connect to other services, such as financial networks, payment processors, and digital wallets. Therefore, the app needs to be flexible enough to work with a variety of third-party APIs.
Security and Privacy for Legal Compliance
Your P2P lending app needs to be fault-tolerant, so make sure that’s something the mobile app development business you hire takes into account. It signifies that the application will continue to function normally despite a high volume of simultaneous user requests. That’s why they employ unique techniques for error handling in mobile app development.
Both the website and the mobile app need to have robust security measures in place. Cross-site scripting, Structured Query Language (SQL) injections, exposed sensitive data, weak authentication, etc. are just a few of the common threats that must be mitigated in order to keep your app secure.
Protect the privacy of your users by encrypting their information. You need to use the most up-to-date encryption methods and signature technology.
GDPR and CCPA Compliant
The abbreviation for “General Data Protection Regulation” is “GDPR.” The European market saw its implementation in May 2018. The CCPA is short for the California Privacy Act. Among the rights afforded by these regulations are those of access and disclosure, erasure and restriction of processing, data portability, and objection to profiling and automated decision-making.
One of the most lucrative mobile app ideas, if executed properly, is the development of a peer-to-peer money lending app. You should get in touch with a mobile app development company such as Webs Optimization, which specializes in making these apps for smartphones as per specified requirements.