Prosper, Zopa, P2P Lending – Heard of it?

I actually wrote this up back in February ’06 and never posted it, but after reading Stuart and then Léon‘s recent blogs, I fugured at add my own on the topic.

10 February 2006–
Today, while I was studying for a marketing test, I became distracted by an idea I had a while back for a “virtual lanlord” service. So I got up, because a good biz idea is a great reason to stop studying, and did some Google’n. Long story short, I didn’t find what I was looking for – maybe a good thing for my virtual landlord company – but I did find two services that I think are awesome: Prosper, in the US, and Zopa, in Great Britain, are the only two online marketplaces facilitating person-to-person lending (PLEASE correct me if I am wrong). They remove the bank from the lending/borrowing sequence and take advantage of their countries’ Automated Clearinghouse (ACH) to electronically transfer money for free. On the lender’s side, I think of it as a “virtual landlord” for leased moneys. It compiles a repayment schedule, tells/reminds borrowers (renters) when to pay, allows them to pay online, and enforces the law (forecloses) when they don’t pay; therefore taking the stress off the shoulders of the lender. The above still sounds kinda confusing, check out this Via Prosper’s “how it works” page:

“People who need money request it, and other people bid for the privilege of lending it to them. Prosper makes sure everything is safe, fair and easy. Here’s how it works:

Visual summary of the Prosper process: Borrower requests a loan, lenders bid on the listing, and the borrower's loan is created.
(click image to enlarge)

…and via zopa:

“The markets work just like, well, markets. Lenders put their wares on display; in this case, money they are prepared to lend to other people for a certain length of time. And, just like any market, different vendors may have different prices (otherwise known as interest rates). Some may pick lower rates but only want to lend to borrowers who have a very high likelihood of paying it all back. Others may pick higher rates but be prepared to be more flexible, thereby taking a punt on borrowers who might be slightly more likely to default. Borrowers can then come and have a sniff about, see what the rates are and if they’re good value agree to borrow. Because Zopa cuts out the middleman, everyone gets a great deal. … All lenders and borrowers enter into a legally binding contract with their respective borrowers and lenders. Zopa manages the collection of monthly repayments and if any of that money is not paid on time, uses exactly the same sort of recovery processes that the high street banks use. Zopa earns money by normally charging borrowers an exchange fee of 1% and if borrowers take out repayment protection insurance on their loan, receives commission from its insurance provider. Zopa doesn’t charge lenders a bean.”

Continue reading Prosper, Zopa, P2P Lending – Heard of it?

Google boss warns politicians about Internet power

Interesting article from Reuters London – thus the use of “boss.”
Google boss warns politicians about Internet power
Wed Oct 4, 2006 1:53 AM BST

LONDON (Reuters) – Imagine being able to check instantly whether or not statements made by politicians were correct. That is the sort of service Google Inc. boss Eric Schmidt believes the Internet will offer within five years.
Politicians have yet to appreciate the impact of the online world, which will also affect the outcome of elections, Schmidt said in an interview with the Financial Times published on Wednesday.

He predicted that “truth predictor” software would, within five years, “hold politicians to account.” People would be able to use programmes to check seemingly factual statements against historical data to see to see if they were correct.

Continue reading Google boss warns politicians about Internet power