Social lending arrives in US
Posted by Trey Reeme on February 6th, 2006
From yesterday’s TechCrunch post Prosper Launches – Social Lending:
San Francisco-based Prosper launched today. . . . Like London-based (and Benchmark funded) Zopa, Prosper is a marketplace for borrowers and lenders.
Don’t see a threat to the CU industry? Look at Prosper’s near equivalent of SEGs in credit unions.
Also, take a look at LoanBack, whose idea is “to make it much easier to arrange informal loans—the kind friends or family might give to each other, for instance,” according to a post called The Web 2.0 Wave vs. LoanBack at O’Reilly Radar.
It’s noteworthy because these are the first live instances of social lending in the US of which we’ve heard. Scott Patterson predicted it on his blog just a few weeks back in an engaging post called Zopa for you … P2P lending is coming soon, where he writes,
Apparently Zopa plans to make a big U.S. splash in the early part of this year. I’m sure the press will pick up on this and run. They are likely to attract quite an audience and I feel confident they will have at least some initial success.
However, I’m unsure about the long term impact on the financial services industry as a whole. What will your credit union’s response be? Do we need an industry response? Are there additional lessons to be learned from Zopa’s model that can help us improve our own?
Overall, I think this should be a wake up call for CUs to leverage their advantages from the banking and for-profit models more effectively. Credit unions have the ability to offer superior rates and service. Who will execute?
Ok – help me out… Where is Prosper.com taking their cut. I reviewed the Lender “Tutorial” as well as the Buyer – and there weren’t any “fee” references for either party. What am I missing?
Thanks!
V, Good question -
A page under their welcome section discloses their fees. Looks like it’s pretty straightforward: Borrowers incur a 1% closing fee and a 0.25% non-electronic payment charge for customers not using ACH. Lenders pay a .5% annual service fee. There are also delinquency fees of $5 for failed payments and $15 or 5% for late payments.