ZOPA is coming to US - Person to Person Lending
Steve Benton, Executive Director of Information Technology with UBS was sharing this company's story with me. It is an amazingly out-of-the box banking business model that could drive massive change here in the states.Zopa says here's the way the world works
(and it must be right because it's been like this for hundreds of years...):People who have spare money give it to a bank.
Banks then do whatever they like with it.
Some of it they lend to people who need to borrow.
Some of it they give to their shareholders.
Some of it they gamble on the price of tin, or the dollar going down, or whether there'll be floods in Asia. Banks make lots of money from all this, a fraction of which they give back to their customers.
team who founded Egg, the world’s largest purely online bank, Zopa has attracted over 60,000 registrants and is going from strength to strength.Zopa though lets people who have spare money to lend, lend it directly to people, like them, who want to borrow it. No bank in the middle, no huge overheads, no unethical investments.
Zopa is, therefore, for people who want to be a part of something new. Who want to join a community of like-minded individuals and lend to them and borrow from them in a trusting but secure way.
Zopa is for people who are looking for a better rate of return. Zopa's interest rates aren't squeezed by middlemen (the banks) because there are no middlemen - that's the Zopa idea.Zopa is for creditworthy people who earn money in new ways, in ways that banks don't always recognize. People who are self employed, people who have peaks and troughs to their income, people who would be invisible to a bank's credit rating system but are seen and validated by Zopa's.
Zopa's an unusual offering in many ways, but the more you think about it, the more necessary it is.- Because we live in an age when opting out is the new opting in.
- Because we live in an age when everyday entrepreneurs should be encouraged and praised, not dismissed.
- Because we live in an age when creditworthy people frequently have unpredictable income streams. - Because we live in an age when 9-5 isn't the be-all-and-end-all, but banks still think it is.
And that's why we're doing this. And now we'll get down off our high horse.Zopa launched over a year ago in the UK. Set up by the
Good news! Zopa is planning to be up and running in California within the year.We’ve just secured $15 million to help us launch, with funding coming from a new backer, Bessemer Venture Partners, as well as our existing investors, Benchmark Capital and Wellington Partners.
It’s great to have Bessemer Venture Partners on board. They’re the oldest venture capital practice in the United States and to be able to call on their experience and expertise will prove invaluable - after all, these are the guys who backed Skype.
What Zopa does is very simple: it brings people who want to lend together with people who want to borrow, and because there’s not a bank in sight, both parties get a great deal. We’ve been doing lots of consumer research in California ahead of launching, and the people we spoke to told us that Zopa should have 3 things:
- Great rates
- Effective risk-management
- A genuine community environment
So those will be the 3 main ingredients in the Zopa cake when we launch in California. And we can assure you it will be a distinctly American cake - more of a brownie than a scone, if you like.As you read this, we’re busy setting up offices in San Francisco and recruiting more members to the Zopa California team!
"We are moving from a consumer society of mass production to a society where we are defined more as individuals," says Zopa CEO Richard Duvall. Yet in banking, Duvall points out, "there are still enormous corporations controlling our money." Duvall believes that a nimble Zopa can trounce banks in assessing credit by gauging things that banks typically don't review, such as a person's eBay ratings. And he's injecting a social aspect into lending. Just as in a social network, lenders can read the online profiles of the people borrowing their money. "If I borrow from real people," Duvall says, "I'm more likely to pay back than if I borrow from a faceless bank."
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