Question

List at least 3 reasons for establishing international banking services. Briefly describe the nature of P2P
(peer to peer) lending.

Answer 1

There are various reasons for establishing international baking services. The first and the foremost reason for this is obviously to expand their operations to other areas-a new market thus increasing the customer circle. Extending banking services help the banks to obtain new customers which inturn increase their performance and efficiency which is yet another motive. Extending the services helps the bank to boost the profits and also bring in more efficiency as now they are competing in a global market. Also another reason could be to protect themselves from interest rate risk. There can be situations where domestic interest rates are more fluctuating than the global interest rates. Hence operating in a foreign market can reduce the risk of fluctuating interest rates.

As the name suggests peer to peer lending is the process of financing the debt wherein an individual borrows money from another individual/peer investor without any intermediary. It works on an online platform.Usually in this platform services are more cheaper. Also the interest rates are lower as there would be many members offering competitive interest rates. It is commonly known as crowd lending.