Wednesday, March 28, 2007

Springwise on Bankless Banking

We've written about peer-to-peer lending marketplaces before: Zopa (UK) and Prosper (US) both allow people to lend money directly to others, cutting out banks and other middlemen. Which means better interest rates for borrowers and higher returns for lenders. Described as eBay for loans, the P2P money exchanges work as follows: borrowers list loan details and a personal profile, and lenders bid on the loan. Lowest interest rates win. Lenders bid in increments and minimize their risk by bidding on numerous loans.

A study by Online Banking Report predicts that by 2011 person-to-person lending in the US could surpass 100,000 loans a year, worth more than USD 1 billion. Unlike eBay, which can connect buyers and sellers from around the world, peer to peer lending is generally bound by local financial regulations. Which means there's ample room for national or regional versions. A quick run-down of our most recent spottings from the realm of social lending:

Boober | Launched last month, Boober is bringing peer to peer lending to The Netherlands. The start-up works much like Zopa and Prosper, with prospective borrowers listing the amount they want to borrow, their credit rating, purpose of the loan, interest rate they're willing to pay, etc. Credit ratings are determined by credit report agency Experian. And loans to AA and AAA borrowers are guaranteed by debt collectors Intrum Justitia, at 90% and 99.5% respectively. Investors are required to distribute their capital over at least 10 borrowers to minimize risk. Borrowers pay EUR 19.95 to have their credit rating determined, and if their loan is funded, they pay Boober a yearly fee of 0.5% of the loan. Investors pay a yearly fee of 0.5% over the funds they've invested, as well as an annual contribution of EUR 9.95.

Boober's founder, Guus Drijver, doesn't hesitate to share his feelings about why Boober is better than the Big Banks: "Boober doesn't work with hidden costs and is completely transparent. We don't sponsor yacht races or soccer teams, and don't have expensive headquarters or pay thousands of people high salaries." Boober isn't alone in this sentiment; many consumers are equally discontent with banks and their high profit margins, driving interest in alternatives like p2p lending. After a beta phase in The Netherlands, Boober hopes to expand to Belgium and Germany.

Website: / Contact:

Smava | In Germany, Boober will have to compete against Smava, which launched earlier this month. Smava currently allows loans of EUR 500 to 10,000. The company charges borrowers a 1% fee of the loan amount and EUR 10 for a credit check. Unlike Boober, Smava is following Prosper's lead by encouraging borrowers to form groups. By adding a level of peer pressure and control, tight-knit groups help lower the risk of defaults, boosting a group's reputation and attracting lenders at better rates. Smava's backers include Stefan Glänzer of and

Website: / Contact:

CommunityLend | Set to launch in Fall 2007, CommunityLend hopes to revolutionize the way lending works in Canada. A test phase over the next few months will let users set up profiles, manage loans, bid on auctions and create groups without using real money. One to watch! Or invest in ;-)

Website: / Contact: | Meanwhile, feeder businesses are starting to pop up, too. Just as eBay spawned offline drop-off shops to facilitate online selling, Prosper has led to the creation of, which aims to provide extra information to help borrowers and lenders make smart decisions: "With currently approx. 103,432 listings in over 989 groups created by over 46,779 borrowers and over 8899 loans successfully funded, it is hard to identify overall trends and find the pearls. is dedicated to serve as an automated clerk, offering you the information you need."

Website: / Contact:

Spotted by: Marijke Krabbenbos

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