A savings account holds your money at a bank, pays low interest, and is covered by deposit insurance (around CHF 100,000 in Switzerland or €100,000 in the EU), with near-instant access. P2P lending invests your money in business loans for potentially higher returns, but the capital is not insured and can be partly or fully lost.
A savings account is a type of investment when the funds are deposited in a bank account and the interest is paid back in an amount equal to the bank’s interest rate. A savings account typically comes with the option to choose deposit insurance that is available in many countries, including the European Union and Switzerland. Therefore, a savings account can be generally perceived as a very high liquidity investment asset.
P2P lending describes the process of the investor lending money to an individual or a company not via traditional financial institutions but via a platform. The investor then receives fixed regular interest payments on the loan that are the returns on investment. P2P loans are not covered by deposit insurance. Yet the platforms may use secured loans (backed by collateral) to mitigate the potential risks of capital loss. However, the risk remains, and no guarantees of the funds’ return exist.
Modest interest rates offered by a savings account are usually explainable by the account’s liquidity and deposit insurance policy. Overall, the rates change over time and are dependent on the current market conditions and the overall strategy of the central bank of the country. The investors profit from a higher degree of liquidity in comparison to P2P lending as well as deposit protection that can have a quite high limit.
P2P lending accepts a low liquidity trade-off by offering higher return rates. The rates are calculated as annualized return on investment, or AROI, and account for potential, not real, returns. In P2P investment, returns of the funds are never guaranteed since it is not a risk-free investment. Since P2P fund returns depend on the financial conditions of the borrower, borrower default may lead to a complete or partial loss of the principal.
If P2P investment is compared to the savings account in terms of capital protection, the biggest difference will surface. Banks provide deposit insurance on a certain sum for the client, allowing them to use deposit protection up to a certain sum. This way, the capital is protected by a deposit insurance. Conversely, P2P investment does not have any protection of the investor’s capital, and overall asset management emphasizes risk mitigation through other mechanisms used by the investment platforms. The review of both asset classes is given in the table below.
| Dimension | P2P lending | Savings account |
|---|---|---|
| Returns and how measured | Higher, measured as AROI, the returns are not guaranteed | Low, fixed or fluctuating interest rate, measured as APY |
| Risk | Borrower default risk, platform risk, partial or complete capital loss is possible | Very low, limited by the trustworthiness of the bank and by the bank deposits insurance limit |
| Liquidity | Early exit only through the Secondary Market with a seller’s fee of 2.5%; usually, the principal is retained until the claim’s maturity, liquidity is limited and not guaranteed | Immediate or almost immediate access, high liquidity |
| Minimum capital | From €50 per claim | From zero |
| Time horizon | Short- to mid-term, fixed-term loan | Any, from short-term to long-term |
| Income type | Fixed regular interest income from the loan | Interest income from the deposit |
| Capital protection | No insurance on the loans, mitigation of the risk by the collateral (conservative LTV) and the Provision Fund (does not equal buyback guarantee) | Deposit insurance up to 100,000 CHF or 100,000 EUR per client per bank |
| Taxation | Interest income is taxed as income tax; rules differ by jurisdiction. Maclear does not withhold taxes. For legal advice, consult tax professionals | Percentages from the deposits are taxed as income tax. For legal advice, consult tax professionals |
This table is illustrative. Returns are not guaranteed, minimums/fees/liquidity vary by platform and over time, and all investments carry risk, including loss of capital.
No, P2P lending does not have deposit protection. Since P2P investments are not a bank deposit, they are not legally covered by insurance. Instead, P2P lending should be treated like an investment. That is why many platforms provide the mechanisms to mitigate liquidity risks, including the Provision Fund and the collateral that secures a P2P loan.
Liquidity is what distinguishes a savings account from P2P lending. A savings account usually features high liquidity due to the insurance of the deposit on a certain sum. In Switzerland, this sum can go up to 100,000 CHF. P2P lending does not have the same insurance mechanism. The platforms use certain tools to mitigate the risks connected with liquidity in other ways.
P2P lending generally offers less liquidity than a savings account because the investor usually has to hold the funds until the claim reaches maturity. Some investors, however, still want to exit early, and, for this reason, the platforms offer the Secondary Market. This is a market where the investor may sell a claim earlier provided another investor shows interest and bids to buy it. The seller would have to pay the seller’s commission (2.5% from the sale on Maclear) and may lose liquidity completely if the sale is unsuccessful because there is no buyer.
It is typical for a P2P investor to get the funds back only after the loan has reached maturity. The options to get the funds faster are quite limited. The investor may try selling the claim on the Secondary Market, yet the sale is not guaranteed, and the investor may lose liquidity or money when selling with a discount and paying a seller’s fee.
Financial objectives of a savings account and P2P lending do not correlate perfectly. Instead, these two assets are distinct types that can help to diversify the finances of the investor. A savings account can be used as an emergency fund or as a stable source of immediate capital that can be withdrawn. A savings account can naturally feature high liquidity. P2P lending, on the other hand, may help the investors who seek capital retention and gains in the long run. An alternative method of fixed income through interest paid by the P2P loan borrower allows the investor to have a potentially higher return.
P2P lending is an investment, not a savings product: it carries no deposit insurance, returns are not guaranteed, capital can be partly or fully lost, and it does not replace a savings account or an emergency fund.
No, P2P lending is not inherently better than a bank savings account. Although P2P lending can offer higher returns than a savings account, it may carry higher liquidity, credit, and platform risk. Savings accounts are generally considered a more stable option with lower returns.
No, P2P lending is not generally safer than a savings account. The two serve different functions: P2P lending focuses on capital retention via fixed interest payments, while a savings account acts as a capital buffer. A savings account generally carries less liquidity and credit risk, but neither is risk-free.
No, P2P lending does not have deposit protection. Instead, platforms may mitigate the risk by securing the loan against collateral or by supporting interest through a Provision Fund. Still, neither collateral nor the Provision Fund guarantees the return of capital; they only help mitigate the risk.
No, withdrawing money from P2P lending as quickly as from a savings account is usually not possible. A P2P loan is normally held until the claim's maturity, and an early exit is only possible if the claim is sold on the Secondary Market to another investor. A savings account allows immediate or almost immediate withdrawal.
No, an emergency fund should stay liquid and secure. P2P lending is not a risk-free investment, and the investor always carries a degree of risk, including partial or complete capital loss. An emergency fund should therefore not be moved into P2P lending.
Maclear AG is a Swiss-based P2P lending and crowdlending platform headquartered 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. Maclear offers retail and qualified investors access to vetted business loan opportunities, with built-in risk assessment, a Provision Fund, and a Secondary Market for liquidity.
The content of this article is provided for informational and educational purposes only. It does not constitute investment, financial, tax, or legal advice. P2P lending and crowdlending investments carry a risk of partial or total capital loss. Past performance is not indicative of future results. Liquidity on a secondary market is not guaranteed. Readers should conduct independent research and consult qualified advisors before making any financial decisions. Availability of products and services may be restricted in certain jurisdictions.
