Internet of Things and Blockchain-Based Smart Contracts: Enabling Continuous Risk Monitoring and Assessment in Peer-to-Peer Lending

Peer-to-peer (P2P) lending enables individuals and small companies to finance and invest without the intermediation of financial institutions. However, this business model is also associated with high delinquency risk and a lack of risk monitoring and control capabilities. This paper explores the potential of the Internet of Things (IoT), blockchain, smart contract technologies, and the Continuous Risk Monitoring and Assessment (CRMA) framework to re-engineer risk monitoring and control for P2P lending. We conducted a case study of a large Chinese P2P lending company to identify problems in its current risk monitoring and control processes and to design an IoT-smart contract CRMA system to continuously monitor and respond to delinquency risk via real-time data collection, automatic loan settlement, and in-time risk disclosure.