Traditional lenders feel the heat as P2P firms gain ground

Peer-to-peer lending companies are expected to pose a strong challenge to traditional lenders in China, as they continue to attract more customers and enterprise clients with lower financing costs, experts said.

P2P lending is the practice of lending money to unrelated individuals, or peers, without going through a traditional financial intermediary such as a bank.

By the end of July, there were 1,283 Internet lending companies and the transaction volumes of these companies will be around 250 billion yuan ($40.7 billion) by the end of this year, according to data from wangdaizhijia, a portal offering Internet lending information.