Peer-to-Peer Lending
While the vast majority of today’s loans rely on traditional financial services to complete the transaction, a novel breed of lenders is making waves in the industry. These lenders, commonly referred to as peer-to-peer lenders – or P2P – aim to make borrowing and lending a more intimate business. In lieu of heavy infrastructure and legions of credit experts, P2P lenders combine a blend of high technology with the credit union ethos of pooling of resources.
The Filene Research Institute sees the P2P phenomenon as a trend credit unions need to be aware of, as both challenge and opportunity. In a newly released special report, Peer-to-Peer Lending: Back to the Future. Filene Director of Research George Hofheimer examines the potential impact of P2P lending and suggests ideas for credit unions to take advantage of the trend in its formative stages.
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Doug True August 2, 2006
Highly recommend credit unions read this report on P2P lending. The report provides an excellent summary of the current P2P landscape. I agree with the closing sentiment, the concept looks a lot like grass root credit union efforts in their early days. This is an opportunity for credit unions.
Jim Olney August 22, 2006
This is a great, thought-provoking report. P2P lending may be viewed as a threat or an opportunity for CUs. I am thinking opportunity: $89 Billion in private loans per year.
PeerLend January 10, 2008
A minor update on this space:
Prosper has originated over $100mm in loans, with over 500k+ members, and parked about $20mm more in VC not long ago.
Zopa (who, at the time of this article, operated only in the UK) has launched a US version in partnership with six US credit unions. The model is not quite “P2P”, as lenders are asked to purchase a guaranteed CD (~5%), the purchase proceeds of which Zopa will lend out to borrowers (presumably pocketing the spread).
LendingClub.com, a completely new player, launched via the FaceBook social networking platform, and has just recently opened to the non-facebook public. Their platform is P2P, but it differs from Prosper’s more laissez faire implementation in that LendingClub underwrites the loans, bucketing them into different grades at different rates – doing away with the typical auction process.
More info, including side by side comparisons of players, at:
PeerLend: Peer-to-Peer Lending & P2P Loan Guide
Two more market entrants are apparently ramping up for launch, as well: GlobeFunder & Loanio. The former is in limited testing in a handful of states, the latter in stealth mode, but supposedly scheduled for launch sometime in January ‘08.
In addition to the US for-profit players, there are also are several non-US focused, more “social finance” oriented, services: Kiva.org has seen continued success (especially in getting its CEO into AmEx commercials!), and eBay has made a recent investment in MicroPlace.com, a social-microlending venture that allows Westerners to invest into individual borrowers in developing nations.