Mastering IELTS Writing Task 2: Sample Essays and Analysis on Peer-to-Peer Lending’s Impact on Banking

Peer-to-peer lending and its effects on traditional banking is an increasingly relevant topic in the world of finance and technology. While it hasn’t been a frequent subject in past IELTS exams, the growing importance of this topic suggests it may appear more often in future tests. Based on trends in recent IELTS Writing Task 2 questions, we can anticipate seeing prompts related to financial technology and its impact on traditional institutions.

Let’s examine a potential IELTS Writing Task 2 question on this subject:

Some people believe that peer-to-peer lending platforms are revolutionizing the banking industry, while others argue that traditional banks will always be necessary. Discuss both views and give your own opinion.

Analyzing the Question

This question requires candidates to:

1. Discuss the perspective that peer-to-peer lending is transforming banking
2. Explain the viewpoint that traditional banks remain essential
3. Provide their personal opinion on the matter

A well-structured response should include an introduction, two body paragraphs discussing each view, a paragraph expressing the writer’s opinion, and a conclusion.

Sample Essay 1 (Band 8-9)

In recent years, the rise of peer-to-peer (P2P) lending platforms has sparked a debate about the future of banking. While some argue that these innovative services are revolutionizing the financial industry, others maintain that traditional banks will always play a crucial role. This essay will examine both perspectives before presenting my own view on the matter.

Proponents of P2P lending argue that these platforms are transforming the banking landscape by offering more accessible and efficient financial services. By connecting borrowers directly with lenders, P2P platforms can often provide loans at lower interest rates and with less stringent requirements than traditional banks. This democratization of lending has opened up new opportunities for individuals and small businesses that may have been previously underserved by the conventional banking system. Moreover, the use of advanced algorithms and data analytics allows P2P platforms to assess creditworthiness more quickly and accurately, streamlining the entire lending process.

On the other hand, supporters of traditional banking contend that established financial institutions will always be necessary due to their unique advantages and the critical functions they serve in the economy. Banks offer a wide range of services beyond lending, including savings accounts, investment products, and financial advice, which P2P platforms cannot easily replicate. Furthermore, traditional banks are subject to strict regulations and oversight, providing a level of security and stability that may be lacking in the relatively new and less regulated P2P sector. The ability of banks to create money through fractional reserve banking also plays a crucial role in economic growth and monetary policy, a function that P2P lenders cannot fulfill.

In my opinion, while P2P lending platforms are indeed revolutionizing certain aspects of the financial industry, they are unlikely to completely replace traditional banks. Instead, I believe we are moving towards a hybrid system where P2P lenders and conventional banks coexist and complement each other. This synergy could lead to increased competition, driving innovation and improved services across the entire financial sector. Consumers and businesses will ultimately benefit from having a wider range of options to meet their diverse financial needs.

In conclusion, the impact of P2P lending on the banking industry is significant, but it does not spell the end of traditional banks. Both have their strengths and weaknesses, and the future of finance is likely to involve a combination of innovative P2P services and the enduring stability of established banking institutions. This evolution in the financial landscape will likely result in a more dynamic and inclusive system that better serves the needs of all participants in the economy.

Peer-to-Peer Lending vs Traditional Banking

Essay 1 Analysis (Band 8-9)

This essay demonstrates excellence in all four marking criteria:

1. Task Response: The essay fully addresses all parts of the task, presenting a well-developed response with relevant, extended, and supported ideas.

2. Coherence and Cohesion: The essay is cohesive with clear progression throughout. It uses a range of cohesive devices and linking words effectively.

3. Lexical Resource: The vocabulary used is sophisticated and precise, with a wide range of less common lexical items. For example: “democratization of lending,” “stringent requirements,” “fractional reserve banking.”

4. Grammatical Range and Accuracy: The essay displays a wide range of complex structures used accurately and flexibly. There is a mix of simple and complex sentences with no noticeable errors.

Key strengths of this essay include:

• Clear and logical structure
• Balanced discussion of both viewpoints
• Well-developed arguments with specific examples
• Sophisticated vocabulary and complex sentence structures
• A clear personal opinion that synthesizes the discussion

Sample Essay 2 (Band 6-7)

The growth of peer-to-peer lending platforms has changed the way people borrow and lend money. Some people think these platforms are changing the banking industry completely, while others believe traditional banks will always be needed. This essay will discuss both views and give my opinion.

On one hand, peer-to-peer lending platforms are making big changes in banking. They allow people to borrow money directly from other people, often with lower interest rates than banks. This is good for people who might not be able to get loans from banks easily. Also, these platforms use technology to make decisions quickly, which makes the process faster and easier for borrowers.

However, traditional banks still have important roles that peer-to-peer lenders can’t replace. Banks offer many services like savings accounts, credit cards, and financial advice. They are also regulated by the government, which makes them safer for customers. Many people trust banks more because they have been around for a long time and have a physical presence in their communities.

In my opinion, both peer-to-peer lending platforms and traditional banks have their strengths. I think in the future, we will see both types of services working together. This could give people more choices for their financial needs. Peer-to-peer lending might be good for some types of loans, while traditional banks will still be important for other services.

To conclude, peer-to-peer lending is changing some parts of banking, but traditional banks will still be necessary. The financial industry is likely to change to include both new technology and traditional banking services. This could be better for customers as they will have more options to choose from.

The Future of Banking: A Hybrid Model

Essay 2 Analysis (Band 6-7)

This essay demonstrates good competence in the four marking criteria, but with some limitations:

1. Task Response: The essay addresses all parts of the task, but some points are underdeveloped. The ideas are relevant but lack extension and support in some areas.

2. Coherence and Cohesion: The essay is generally well-organized with clear overall progression. However, the use of cohesive devices is sometimes mechanical or repetitive.

3. Lexical Resource: The vocabulary is adequate for the task, with some attempts at less common lexical items. However, there are occasional errors in word choice or formation.

4. Grammatical Range and Accuracy: The essay uses a mix of simple and complex sentence forms. There are some errors, but they do not impede communication.

Key aspects of this essay include:

• Clear structure with introduction, body paragraphs, and conclusion
• Discussion of both viewpoints
• Personal opinion provided
• Some use of topic-specific vocabulary
• Generally clear and coherent writing, but lacking sophistication

Key Vocabulary

1. Peer-to-peer lending (noun): A method of debt financing that enables individuals to borrow and lend money without an official financial institution as an intermediary.
   Pronunciation: /pɪər tə pɪər ˈlendɪŋ/

2. Revolutionize (verb): To change something radically or fundamentally.
   Pronunciation: /ˌrevəˈluːʃənaɪz/

3. Democratization (noun): The action of making something accessible to everyone.
   Pronunciation: /dɪˌmɒkrətaɪˈzeɪʃən/

4. Creditworthiness (noun): The extent to which a person or company is considered suitable to receive financial credit, often based on their reliability in paying money back in the past.
   Pronunciation: /ˈkredɪtˌwɜːðɪnəs/

5. Fractional reserve banking (noun): A system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal.
   Pronunciation: /ˈfrækʃənəl rɪˈzɜːv ˈbæŋkɪŋ/

6. Synergy (noun): The interaction or cooperation of two or more organizations, substances, or other agents to produce a combined effect greater than the sum of their separate effects.
   Pronunciation: /ˈsɪnədʒi/

7. Stringent (adjective): Strict, precise, and exacting.
   Pronunciation: /ˈstrɪndʒənt/

8. Oversight (noun): The action of overseeing something; supervision or vigilant care.
   Pronunciation: /ˈəʊvəsaɪt/

In conclusion, the topic of peer-to-peer lending and its impact on traditional banking is a complex and evolving issue that offers rich material for IELTS Writing Task 2 essays. By understanding the key arguments on both sides and practicing with sample essays like those provided, you can prepare yourself to tackle similar questions effectively.

To further enhance your skills, try writing your own essay on this topic and share it in the comments section below. This practice will help you apply the vocabulary, structures, and arguments discussed in this article, improving your ability to craft high-scoring responses in the IELTS Writing Task 2.

For additional practice, consider exploring related topics such as:

1. The role of cryptocurrencies in the future of finance
2. The impact of artificial intelligence on job markets in the banking sector
3. The pros and cons of cashless societies

Remember, consistent practice and exposure to a variety of topics will help you build the skills and confidence needed to excel in the IELTS Writing Task 2.