Thursday, March 10, 2005

Interesting new lending model

BBC writes about a British company that is taking the marketplace functionality of eBay and applying it to personal banking. I am not sure how successful this model can ever really be - but it might be interesting if the market rates established at this marketplace become some sort of a marker for a fair interest rate...

"...Zopa - an online loans service that works in a similar way. Anyone with some spare cash can offer it up for a loan, through Zopa. Lenders set their own interest rates and can choose which borrowers to lend to, based on their credit rating.

Borrowers, meanwhile, can pick a rate that's right for them and because Zopa is simply assisting the transaction, not lending its own assets, it claims to take a smaller cut (1% of the amount borrowed) than a bank. Safeguards are built in to help prevent lenders being fleeced and the whole outfit is sanctioned by the FSA - Britain's financial services watchdog. "

An unfortunate name, IMO, but it will be interesting to see how they fare.


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