Islamic Online P2P Lending Platform

Abstract

Peer to peer (P2P) lending allows people with fund surplus to lend to people who need funds via online platforms. Those who need fund become able to choose the most suitable fund provider; lender. In this type of intermediation, banks are out of the equation, and online platforms bring together the ones in need with the ones with surplus funds. Those in need of funding can communicate directly with the people they will borrow while they become able to obtain funds at cheaper costs. On the other hand, those wishing to lend can obtain higher returns compared to they would obtain by making a deposit in a bank. Lenders have the opportunity to choose whom they will lend to, or they can determine the desired interest rate based on the type of risk they undertake. Islamic P2P lending model; unlike conventional banking; is based on profit-loss partnership, requires a product of financing to trade as a physical good or service. In this study, how to create such a digital platform is explained from the business and technical aspects. With the platform implemented, P2P lending is fully digitally operated, and all processes are performed automatically on this platform.