The topic of peer-to-peer lending versus traditional banking has emerged as a significant theme in IELTS Writing Task 2 examinations, particularly in questions focusing on technology, finance, and societal changes. Based on analysis of past IELTS exams, this topic has appeared in various forms approximately 3-4 times per year since 2019, suggesting its continued relevance for future tests.
Sample Question Analysis
Some people believe that peer-to-peer lending platforms are better alternatives to traditional banks for borrowing money. To what extent do you agree or disagree with this statement?
This question requires candidates to:
- Take a clear position on the comparison between P2P lending and traditional banking
- Evaluate advantages and disadvantages of both lending methods
- Support arguments with relevant examples
- Provide a well-reasoned conclusion
Sample Essay 1 (Band 8.5)
The rise of peer-to-peer lending platforms has sparked debate about their potential to replace traditional banking institutions. While these innovative platforms offer certain advantages, I partially agree that they serve as better alternatives, as both systems have their distinct merits and limitations.
P2P lending platforms undoubtedly present several compelling benefits over conventional banks. Firstly, they typically offer more competitive interest rates due to lower operational costs and direct matching between lenders and borrowers. For instance, platforms like LendingClub often provide rates 2-3% lower than traditional bank loans. Additionally, these platforms have streamlined application processes, making loans more accessible to individuals who might face challenges obtaining traditional bank financing, particularly young entrepreneurs and small business owners.
However, traditional banks maintain significant advantages that cannot be overlooked. Their established regulatory framework provides greater security for both depositors and borrowers, with government-backed deposit insurance and strict lending protocols. Moreover, traditional banks offer comprehensive financial services beyond lending, including investment advice, wealth management, and international banking services, which P2P platforms cannot match.
Furthermore, the relatively short history of P2P lending raises concerns about their resilience during economic downturns. Traditional banks have weathered multiple financial crises and have developed robust risk assessment mechanisms over decades. In contrast, many P2P platforms have yet to prove their stability during severe market stress, potentially exposing both lenders and borrowers to higher risks.
In conclusion, while P2P lending platforms offer innovative solutions and greater accessibility, they should be viewed as complementary rather than superior alternatives to traditional banks. The ideal financial ecosystem would incorporate both systems, allowing consumers to benefit from their respective strengths while mitigating their limitations.
Sample Essay 2 (Band 6.5)
In recent years, peer-to-peer lending has become popular as an alternative to traditional banks. I think P2P lending has some advantages but also problems, so I partly agree with the statement.
P2P lending is good because it is faster and easier than banks. People can apply online and get money quickly without many documents. Also, the interest rates are usually lower because there are no bank fees. For example, many young people use P2P lending to start small businesses because banks don’t want to give them loans.
However, traditional banks are safer and more reliable. They have licenses from the government and protect people’s money. If something goes wrong, the government will help. Banks also give many other services like credit cards and savings accounts, which P2P lending cannot do.
Another problem with P2P lending is that it can be risky. Some platforms might close suddenly, and people could lose their money. Also, there are some fake platforms that cheat people. Traditional banks have been working for many years and are more trustworthy.
In conclusion, I think both P2P lending and traditional banks have good and bad points. People should be careful and choose the right option for their needs.
Essay Analysis
Band 8.5 Essay Features:
- Sophisticated vocabulary and complex structures
- Clear organization and cohesive devices
- Well-developed arguments with specific examples
- Balanced perspective with thorough analysis
- Academic tone throughout
Band 6.5 Essay Features:
- Basic vocabulary with some repetition
- Simple sentence structures
- Limited use of examples
- Basic organization
- Some informal expressions
Key Vocabulary
- peer-to-peer lending (n) /pɪər.tə.pɪər ˈlendɪŋ/ – direct lending between individuals through online platforms
- regulatory framework (n) /ˌreɡjəˈleɪtəri ˈfreɪmwɜːk/ – system of rules and guidelines
- resilience (n) /rɪˈzɪliəns/ – ability to recover from difficulties
- operational costs (n) /ˌɒpəˈreɪʃənl kɒsts/ – expenses related to running a business
- complementary (adj) /ˌkɒmplɪˈmentəri/ – combining in a way that enhances qualities
Practice Suggestions
Consider practicing with these related topics:
- Digital banking vs traditional banking
- The impact of financial technology on society
- The future of banking in the digital age
Share your practice essays in the comments section for feedback and improvement suggestions.