Peer-to-peer lending: risk-innovation relationship in the Fintech revolution.

The incumbent banks, always the undisputed leader in the financial industry, have been faced with new entrants, generally of smalls size but extremely aggressive, for the first time. FinTech firms can offer innovative solutions to consumers, siphoning off wide margins to the banking industry. The competition seems to have become strong enough in the credit industry. The dissemination of innovative technologies has encouraged the creation of Peerto-peer lending a subcategory of Crowdfunding. Since it has been developed recently, the market shares of fintech firms are substantially smaller than the bank's ones. However, it could lead to underestimating their effects by supervisory authorities. In order to raise awareness concerning this issue, this work tries to answer these research questions: "Are P2P platforms riskier than traditional credit systems? Which are the emerging risks for this new credit channel? Which are the risks for incumbents and the financial system? Since every innovation always contains a trade-off, through risk analysis, we aim to assess if the benefits related to the P2P system are higher than the potential risks.