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I need to create new products and services(customer journey) that impact on the housing purchase / ownership process better that fit in with growing sharing economy.
The Peer-To-Peer (P2P) mortgage lending network focuses on the Millennial consumer. Social circles will become the new platform for younger buyers to secure home loans. Some of our statistics and examples were a little older because we felt they most directly answered your questions.
Big banks and financial institutions are experiencing an approximate 22.5% decline in mortgage revenues:
3. J. P. Morgan, Chase & Co (JPM), PNC Financial Services Group Inc (PNC), and Citigroup Inc (C) have also reported mortgage banking revenue declines of 19% to 41%.
Traditional banks are only making 25% of the total lending in the United States. P2P transactions can be done online which eliminates the need to approach banks.
Peer-To-Peer lending
1. The P2P lending industry, like Prosper and Lending Club in the US, generated $6.6 billion dollars in loans 2014, which increased by 128%.
2. The United States has one of the largest P2P lending markets in the world by loan volume; however, the United Kingdom has a 72% larger per capita.
3. P2P lending in Europe had a 144% growth and reached nearly €3 billion euros ($3.9 billion dollars) in 2014. France reached €8.2 million euros ($10.6 million dollars) in the same time frame.
4. Moderating factors that may impact the flourishing P2P industry would be new regulations, interest rate hikes, and tenuous bank relationships.
The United Kingdom P2P industry is doing very well after the United States offered the nonprofit campaign "Move Your Money". The message was to divest from banks and embrace the new funding options detailed in this report. Four P2P lenders in the United Kingdom received 55 million British Pounds in taxpayers' money along will another similar sum by private donation. The Business Finance Partnership is a 110 million British pound fund to diversify commercial funding.
United States firms and regulation changes will set the trends within the P2P industry. Europe and the United Kingdom will have to adopt the same P2P guidelines as the United States so that lenders and their conduct can be regulated.
Benefits of P2P lending are lower credit scores will not keep you from getting approved. Problems are that it may take longer to process and approve the loan.
Problems with P2P lending include the time to process and approve the loan is longer. Collection fees can be high which can erode interest advantages. The cost of credit continues to make it more difficult for the young to get financing.
Peer-to-peer insurance
The relationship of trust with groups or pools creating a solidarity fund. If there are no claims, then the proceeds are returned to the people. This model restores confidence and transparency between the insured and insurer.
Here are examples of the P2P insurance model. It can make financial transactions, streamline, and simplify processes. Collaboration with traditional companies to act as a broker.
The first P2P insurtech startups were:
1. Friendsurance. European (D) Founded in 2011 Berlin. It is like an Insurance Groupon reducing the cost of insurance while sharing financial responsibility and claim costs.
2. Guevara (UK) Founded in 2013 and focused on the automotive industry. They pool resources in a digital format to lower group premiums by using annual exceeds.
3. TongluBao (Chinese) Founded in 2000 sells insurance based on the success of a marriage, expenses to locate lost children, divorce, and job positions. Shared responsibility for the insured risk.
4. Lemonade (New York) Founded in 2015 offers homeowner and renter insurance replacing brokers with artificial intelligence and behavioral economics.
5. Inspeer (France) Founded in 2014 was the first P2P insurance in France. They handle automobile, motorcycle, and home insurance. One new model of P2P financial lending is Celsius.
Celsius
Alex Mashinsky, the founder of Celsius, is providing new lending options for the Millennial market. It includes block chain technology to offer P2P lending. Celsius is a new P2P lending platform that launched at the end of 2017. Consumer borrowing is scheduled to begin 2020. It will provide each user with a digital profile.
Online transaction histories, FICO scores along with nontraditional financing statistics will determine the unique credit scores of their customers.
Celsius block chain news site reported that "Celsius will allow members to lend to other members and earn higher interest than they could get with a bank term deposit". Lower interest rates are available that traditional banks cannot offer.
Next, in the case of a loan default, they will offer insurance that covers a percentage of the loan amount. The insured will recover a debt owed to the lender or lenders who invested funds for the loans.
Future Housing Market trends
Real estate trends are following P2P lending and crowdfunding to provide better diversification with new investment options. Smaller square footage requirements and mobile living will offer overpopulated areas some relief in housing density.
New appraisal management legislation will restrict new home-buyers from entering the housing market. Future regulations will create higher costs in 2018.
Immediate confirmation of leases is what the new generation of renters expect today. Expectations are that consumers will continue investing capital in real estate assets. Higher risk bonds and equivalent investments will ensure capital expenditures for real estate.
Micro-unit rentals are well-designed rooms that are typically 200 square feet. The Panoramic in San Francisco and Yotel in New York were the first to implement this trend.
Tiny homes, investment homes and co-living arrangements will offer different millennial options for home ownership.
Conclusion
Millennial home buyers lean towards a peer-2-peer shared economy model over a traditional bank. The global P2P market was estimated to be worth over $180 billion in 2015. The peer-to-peer insurtech model restores confidence and transparency between the insured and insurer.