Skype has become a mainstream word. I use it as verb. I wonder will the words Zopa or Prosper become the Skype's of banking?
Here is an introduction to their services.
NEW YORK (CNNMoney.com) -- Cutting out the banking middleman has long been touted as the next big thing for consumer lending.
Now U.K.-based Zopa is coming to the United States, a move that could give the so-called peer-to-peer lending industry a pivotal boost.
Online
marketplaces like Zopa directly match lenders and borrowers. Lenders
choose the amount of money and interest rate at which they're willing
to loan. Borrowers come to the site and check what rates are available.
If the rates are to their liking, they can complete their loan with a
click.
Another online loan marketplace, Prosper,
has been running in the United States since February, but the arrival
of Zopa brings one more player to the U.S. market, which will help get
the industry on the radar of more consumers, Forrester Research analyst
Catherine Graeber said.
Backed by venture capital heavyweights
like Draper Fisher Jurvetson, Zopa boasts some 87,000 users in the
United Kingdom, and membership is growing at a rate of more than 10
percent a month, according to the company's estimates.
The draw:
better rates than traditional banks offer. Borrowers can take out loans
for as much as $25,000 and enjoy rates as low as 5 percent. And anyone
with anywhere from $100 to $100,000 to spare can lend money and earn
returns better than most high-yield savings accounts and CDs.
"I'm drawn to things that take large,
seemingly bureaucratic industries and simplify them, and Zopa has the
possibility of doing that," said Tim Draper, whose past investments
have included Hotmail and Skype.
Zopa doesn't only offer great
rates; it also provides a "social experience" for borrowers and
lenders, according to Richard Duvall, Zopa's chief executive. Lenders
get to see what happens to their money, and borrowers know they're
accountable to a real person, not just a faceless bank.
Zopa
declined to disclose a specific kickoff date but said its site would be
available in California "soon" and that a nationwide rollout would
follow that launch.
The next phase of the Web
The
timing is right for sites like Zopa and Prosper, which are part of a
broader wave of sites aimed at fostering online communities. Social
networking site MySpace, for instance, has turned into a Web powerhouse
by tapping into teenagers' need to be connected at all times.
Loan
marketplaces undoubtedly are about money, but they're also about
participation, said Prosper chief executive Chris Larsen, who also
co-founded online lending firm E-Loan. "It's the intersection of
commerce and community," he said.
Prosper has attracted about 65,000 members so far and shares similarities with Zopa, but it's run more like eBay (Charts)
- with lenders bidding on loan pitches made by borrowers. And whereas
Zopa only allows those it deems creditworthy to receive loans, Prosper
lets its members make up their own minds when it comes to lending to a
potentially risky borrower.
These firms are still in their early
stages, but they're promising, especially since the consumer lending
space is "ripe for reinvention," Graeber from Forrester said.
Both
companies acknowledged it'll take time for peer-to-peer lending to take
hold, but the addition of more providers in this space bodes well for
the industry, they said.
"Other competitors coming into the
market will cement the industry in people's minds and make it more
likely they would want to try it as lenders and borrowers," Larsen said.
Recent Comments