If you'd like to risk some capital by making a loan to someone you don't know, two new web sites will help you: Prosper and Zopa. Both allow individuals to borrow and lend money, and the web sites are the middlemen. Skeptical? Read on.
Prosper follows a well-established micro-lending tradition: borrowers join a group, and that group has a reputation. Loan rates will in theory rise and fall with the group's reputation, which is based on the actions of the members. Zopa says that it verifies identities to make certain that borrowers actually exist. Both Prosper and Zopa charge fees to originate, receive, and service the loans.
At first glance, Prosper and Zopa are attempting to disaggregate banking: when I have money to invest in a bank account, the authority of how to risk my money now comes back to my hands, instead of being in the hands of a bank officer. On the other hand, however, I can just as easily argue that banks arose in order to share risk and the authority to make a loan is delegated by me to my bank officer, who can specialize in the subject and make good decisions. On that level, Prosper and Zopa are disaggregating some of the components of banking and arranging them in a new way.
If you're skeptical, here's some information to consider: one of the oldest insurance "companies" in the world works almost this same way, bringing customers and independents together to provide insurance. Llyod's of London is named after the cafe — the (pre-Internet) meeting place — where the enterprise was born. Prosper and Zopa may have very well hit on an excellent business model.
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