The peer-to-peer lending model in Belgium : A disruptive outsider ?

The growing penetration of modern internet technologies is changing our social and economic lives, including how we interact with one another and how we share resources. Digitalisation gives rise to new market entry opportunities, especially for technology providers in the financial services area. As a result, peer-to-peer lending, a recent type of alternative finance that puts borrowers and lenders in direct contact through an online platform, started to emerge in the 2000s. Peer-to-peer lending has rapidly expanded in several countries, to the point that one may start to believe that these platforms could one day destabilize financial institutions. This thesis reviews the current business and consumer peer-to-peer lending markets in Belgium, from what they offer today to their potential growth in the coming years in an environment filled with cultural, legislative, economic and social obstacles. We also discuss the legislation issues surrounding this new form of intermediation, and in particular the possible reasons of the prohibition of peer-to-peer consumer lending in Belgium. In this respect, we review and contrast the literature and the opinion of key players in the fields of finance and innovation. Our in-depth analysis argues that peer-to-peer business lending is currently more complementary than disruptive, while the implementation of an efficient legal framework and value-added services may lead to a different outcome. Regarding the peer-to-peer consumer lending, there is significant interest today in Belgium for this concept, and this leads us to believe that the sector may have a glowing future. However, extend the exception of taking repayable funds from the public to natural persons should simultaneously include other measures to contain the risks involved, such as an access for platforms to the Central Individual Credit Register to avoid a potential shadow banking as well as enabling platforms to conduct proper creditworthiness analysis.