When looking for a way to earn a return on available capital, bank deposits are usually one of the first alternatives that come to mind. In recent years, P2P lending has also gained prominence. Both options generate interest in exchange for putting capital to work, but they operate differently and serve different purposes within a financial strategy.
P2P Lending vs. Bank Deposits: Differences, Returns and Risks
When looking for a way to earn a return on available capital, bank deposits are usually one of the first alternatives that come to mind. In recent years, P2P lending has also gained prominence. Both options generate interest in exchange for putting capital to work, but they operate differently and serve different purposes within a financial strategy.
When comparing P2P lending and bank deposits, looking at the interest rate alone is not enough: it helps to understand how each alternative works, where the return comes from, what level of liquidity it offers and what role it can play within a diversified portfolio.
How does each option work?
The main difference lies in what is actually being funded. With a bank deposit, the customer hands over money to an institution for a set period or under specific conditions and receives the remuneration set for the product in return.
In P2P lending, capital is used to fund loans. Digital platforms connect investors with borrowers, so individuals or businesses access financing while investors participate in those transactions.
In business crowdlending, investors directly fund loans to small and medium-sized enterprises through a specialised platform. This creates a more direct link between the investor's capital and the real economy: the money can be used to finance expansion, asset acquisition, working capital or other business needs.
Returns: two different ways of earning interest
Bank deposits offer an interest rate set according to the product's conditions, the term and the prevailing rate environment. In P2P lending, the return is tied to the characteristics of the loan and the profile of the transaction.
By funding business credit directly, an investor can access rates that are potentially higher than those of certain traditional savings products. Maclear, for example, publishes projects with fixed rates of 14% to 16% APR depending on the characteristics and risk profile of each project, and the rate remains fixed for the entire term of the loan.
A higher potential return comes with a different level of risk than a bank deposit, which is why the two alternatives should not be considered equivalent.
P2P lending allows investors to participate in funding businesses
Another relevant difference is where the capital goes. With a bank deposit, the customer does not decide which company or project receives their funds. In P2P lending, the investor can review the characteristics of the loans available and choose among different opportunities.
For an SME, access to alternative financing can support expansion projects, asset acquisition or specific working-capital needs. For the investor, it means gaining access to an asset class linked to business credit.
Diversification: a useful function within a portfolio
P2P lending can also be used to diversify a portfolio's sources of return. A portfolio that combines different asset classes does not depend exclusively on the performance of a single market, and business credit has characteristics different from those of equities or bank savings products.
Within P2P lending itself, it is possible to spread capital across different loans, borrowers and terms, rather than concentrating all exposure in a single transaction. Diversification does not eliminate risk, but it helps build a more balanced exposure.
Liquidity: a difference worth considering
Conditions depend on the type of deposit: some products allow access to the money before maturity, while others set a fixed term or apply penalties for early withdrawal.
In P2P lending, capital generally remains tied to the loan until maturity. Some platforms include secondary markets that offer an additional way to attempt to sell a position early. Maclear operates a Secondary Market where investors can list certain positions for sale, although completing the transaction depends on finding a buyer. The term of each investment should be taken into account before committing capital.
What protection does each alternative offer?
Eligible bank deposits within the European Union are covered by deposit guarantee schemes up to €100,000 per depositor and institution, in accordance with the applicable rules.
P2P lending is not a deposit and is not covered by that scheme: its operation is based on funding loans, so returns depend on the borrower meeting their obligations.
This does not mean that platforms do not apply risk analysis and management mechanisms. At Maclear, borrowers go through a due diligence process that includes legal checks, AML and background controls, and financial analysis, reviewing the balance sheet, income statement, debt levels, working capital, business plan and financial model. Projects that do not meet the established risk criteria are not published. These processes improve the selection of available opportunities, but they do not eliminate the risk associated with any loan investment.
What role can each one play?
The comparison does not have to be framed as an either-or choice. Deposits serve a function related to liquidity and savings, especially for capital that the user wants to keep within a bank product with the corresponding protection.
P2P lending serves a different function: seeking a potentially higher return by funding business loans and diversifying a portfolio's sources of income. Capital earmarked for expected short-term expenses requires different characteristics than money an investor wants to hold over a longer time horizon.
Quick comparison
Characteristic | Bank deposits | P2P lending |
Mechanism | Deposit of capital with a bank | Funding of loans |
Source of return | Deposit interest | Interest on loans |
Destination of capital | Managed by the bank | Funds specific borrowers |
Potential return | Depends on the product and the market | Can be higher, depending on the transaction |
Diversification | Depends on the product taken out | Possibility of spreading across different loans |
Liquidity | Depends on the deposit's conditions | Depends on the term and the availability of a secondary market |
Deposit guarantee | Yes, for eligible deposits within the applicable limits | No |
Credit exposure | Mainly to the bank | To the borrower of the loan |
What is worth analysing before choosing?
The decision largely depends on the purpose of the capital. If the priority is to keep money available within a bank product covered by the corresponding guarantee scheme, a deposit serves that function.
If the goal is to seek an additional source of interest income and diversify a portfolio with exposure to business credit, P2P lending offers a different alternative. In that case, it is worth analysing the term, the borrower's characteristics, the structure of the loan and the distribution of capital across different transactions.
Key takeaways
- A bank deposit compensates capital held with an institution; P2P lending compensates the funding of specific loans.
- Eligible deposits in the EU are covered up to €100,000 per depositor and institution; P2P lending is not covered by any deposit guarantee scheme.
- Maclear publishes projects with fixed rates of 14% to 16% APR, set during the due diligence process according to the risk profile.
- Liquidity in P2P lending depends on the term and on the existence of buyers on the secondary market.
- Both alternatives can coexist within the same strategy because they serve different objectives.
Conclusion
Deposits and P2P lending are alternatives with different characteristics. Deposits focus on bank savings and offer, for eligible products, the protection of the corresponding guarantee scheme. P2P lending allows investors to participate in funding loans and can offer a potentially higher return, as well as a way to diversify a portfolio's sources of income.
As with any investment, risks exist and capital is not guaranteed. The comparison should take into account not only the potential return, but also the time horizon, liquidity and the level of risk each investor is willing to take on.
About Maclear
Maclear AG is a P2P lending and crowdlending platform based in Switzerland. The company operates as a financial intermediary in the non-banking sector and is a member of PolyReg SRO, in compliance with Swiss financial regulations, including AML, KYC and GDPR rules. Maclear offers retail and qualified investors access to verified business loan opportunities, with integrated risk assessment, a Provision Fund and a Secondary Market to provide liquidity.
RISK WARNING. P2P lending carries significant risk, including the potential loss of capital. Borrowers may default, and you could lose part or all of your investment. Past performance does not guarantee future results. Investments are not covered by any deposit guarantee scheme. This content is for educational purposes only and does not constitute financial, investment or legal advice. Consult a qualified financial adviser before investing. Maclear AG is a Swiss crowdlending platform, a member of PolyReg, a self-regulatory organisation supervised by FINMA.