Investors and Borrowers are both benefiting from the technology-driven bank disintermediation. Borrowers get a lower rate. Investors get a better return.
Based on an excellent Goldman analysis of unsecured lending costs, I estimate 250 basis points of delta between Banks cost structure and P2P cost structure in the US.
However, operational expenses are just part of the lending P&L. For many lenders charge-offs are a bigger expense. In the US, the Fed tracks unsecured lending charge-offs. Data in emerging markets is harder to find (If you have emerging market charge-off data please share).
As lending moves online, emerging market lenders, including P2P, will have the benefit of AI based scoring algorithms, like those offered by Lenddo.com to reduce charge-offs and expand financial inclusion. U.S. lenders will move slower to adopt AI/Big Data based lending techniques because U.S. (and especially State) regulators have less incentive to be innovative.
My banking friends would argue that cost of capital is also an important part of a lending P&L, but it seems to me investors only cost is opportunity costs, (and investor can reassess opportunity cost without a 50 person Basel III compliance department).
Post too long? .. try 140 character version @urgentspeed