Technological innovation has paved the way for online Peer-to-Peer (P2P) lending. In this context, this paper investigates key theories and characteristics of both online P2P lending and traditional lending while exploring the challenges accompanying online P2P lending such as platform risk, regulatory constraints, risk assessment skills, and future uncertainty and its impact on its attractiveness such as economic downturns and emerging rules and regulations. The primary aim is to know whether P2P online platforms will replace traditional banks in the future, noting that P2P lending is found to provide more access to borrowers at lower cost, higher returns to lenders, and alternative credit-scoring methods to platforms. This paper makes several contributions by providing an analytical study of online P2P lending to help reform business strategies and improve opportunities, especially in the case of Lebanon where the banking system has been undergoing a severe compounded crisis since 2019, and where the small and medium-sized enterprises are underserved even in times of liquidity surplus.