This article argues that Lending Club can be a better bank than the banks. Whilst I love P2P and think it has a great future to replace saving with lending and remove the middle man (the bank) I'm not sure how long the current P2P model will last.

The premise of P2P is that the platform does something to assess the risk of a borrower and then farms out that risk to an investor. This originate-to-distribute model is far from original and has seldomn ended well. Regulators have long sought to align the interests of originating banks with investors by requiring banks to keep some skin in the game by retain some of the risk of the originated loans. The P2P model isn't there yet because, in my opinion, despite being subject to the same risks and suffering the same lack of alignment, they're just not big enough for regulators to care about.

But if, like me, you believe in the future of P2P lending, then you believe that one day these platforms WILL be big enough to care about. And if that's the case, they're very likely to be required by regulators to keep skin in the game at some point. That means that P2P lending platforms will be enjoying their regulatory arbitrage for now, but it probably won't last forever.