P2P-Banking.com

Zopa UK has announced that it will remove the options to lend for 12, 24 or 48 months and concentrate on lending terms of 36 and 60 months. The changes apply only to money lend through Zopa markets not to Zopa listings.

Why are we making these changes?
- Since Zopa began more than three years ago, more than 95% of your loans have been taken for a period of 3 years or less.
- The popularity of larger loans repaid over 5 years is increasing, particularly since we introduced the new fixed borrower fee.
- Almost half of our new lenders who sign up to Zopa do not become active and our hypothesis is that it is just too time consuming for them to make offers to all of our markets.
- This allows us to simplify the marketplace considerably, while still allowing borrowers to repay their loan early with no penalty.
- Because listings still enables all loan terms from 1 to 5 years, Zopa will continue to offer a wide variety of borrowing and lending options.
- By structuring repayments over at least 36 months, we aim to encourage fewer borrowers to repay their loan early, maximising the interest you earn from each loan and reducing the period your money might spend in your holding account. This is because the loans that have been repaid early to date were mostly taken for 12 and 24 months in the first instance, so that borrowers had paid back a good proportion of their loan after just a few months.
- We’re not envisaging that there will be any significant financial impact for Zopa from these changes. At most, we would earn 0.5% of the outstanding capital for a little longer if we can dissuade early repayment, but since we would hope that lenders would relend any funds repaid early anyway, we’re unlikely to earn anything more significant. These changes are purely aimed at simplifying our offer.

Lender reactions in the forums (19 pages of comments) are mostly negative.
Some lenders speculate that this move is a necessary result of the new flat fee which was introduced earlier. Borrowers pay 94.25 GBP of the loan amount. For short term loans the impact of this fee on the APR is higher then for long term loans. 

As there is no Zopa loan statistics site, it is not possible to track the Zopa growth daily. You have to wait for the instances where Zopa announces milestones.

Today Zopa - in an announcement to celebrate it's third birthday, said:

Since we launched in March 2005, £20 million in unsecured personal loans have been arranged at Zopa in the UK. More recently growth has been boosted by the global credit crunch which is driving unprecedented demand for P2P personal loans as banks become less competitive and tighten their lending criteria. All of this has also pushed up returns to Zopa lenders to an all time high.

At the current exchange rate that is approx. 40 million US$.

P2P lending service Zopa - already present in the US, the UK and Italy announced it will launch in Japan.

Zopa Japan will be led by Chairman Takashi Yoneda and Managing Director Tatsuya Kuboi, both highly experienced and distinguished technology-based financial services professionals. Zopa Japan further strengthens Zopa´s position as the leader in its field. Zopa will continue its track record of firsts, as it will be the first social finance offering in Japan.

Takashi Yoneda, Zopa Japan´s Chairman, says: "We are very pleased to be part of the expanding Zopa worldwide operations, and we look forward to offering innovative financial solutions for the Japanese market. We will draw from the Zopa´s experience across the globe and introduce a social lending platform that is tailored for the Japanese culture and regulatory environment

Zopa tomorrow celebrates it's third birthday - it launched in March 2005 in the UK market. 

Other sources: Techcrunch UK

Some news from p2p lending in Asian markets:

Chinese PPdai.com (see earlier coverage) says it has received a first round of funding from Essentia Private equity. The amount was not disclosed.

On February 27th, Zopa's managing director Giles Andrews mentioned in a webchat "I have also been spending time in Asia and hope that we will launch in 2 very significant markets there in 2008, one of which we may even announce shortly….".
In the webchat Giles Andrews also said regarding the US market: "@Tealer We also think that our "competitors" over there are illegal, and I don't want to go to jail!".
Furthermore Zopa said it plans to launch an (optional) capital guarantee product in the UK market.

See earlier coverage of P2P-Banking.com on the p2p lending markets in Corea, China, India or Japan.

More and more p2p lending services are launching, each catering to different markets and different target audiences. Some derive more features from "ancestors" Prosper or Zopa, some less.

All follow the aim to allow lenders to directly lend money to borrowers without a bank acting as intermediary. This aim is sometimes not pursued strictly to the point. Smava actually partnered with a bank to comply with regulation, Zopa US partnered with credit unions, but nevertheless it serves as comprehensive definition.

Dividing p2p lending services in categories could follow several possible factors:

• price building mechanism (auction/non-auction; interest set by platform/by borrower/by lender)
• purpose of loan (private/business/both)
• social lending vs. lending for profit

I think the last factor is most useful for the definition of categories. It affects all parts of the service from marketing to operations. The differentiation is in the objective the majority of the lenders had when selecting the platform. Were they attracted by the motivation to help an individual through a loan or by the motivation to earn interest? (more…)

In an email newsletter Zopa Italy encouraged its member to spread the word about Zopa to friends and relatives. Zopa says it is for 'a good reason': Zopa Italy pledges to lend $1 on Kiva for each new member that registers at Zopa Italy before January 15th.
Everybody can monitor how much Zopa invested on this lender page at Kiva.

I am sure that Kiva will highly appreciate this promotion, a target audience that is already interested in p2p lending gets introduced to Kiva's concept. But I am not sure if that is a good marketing campaign for Zopa. Should the lenders decide Kiva is an interesting concept they might lend their money at Kiva instead of at Zopa. Maybe Zopa speculates lenders will invest in both. Or Zopa wants the added social angle to increase chances of press coverage.

What do you think? Discuss this at the Zopa forum. 

(Source: Email newsletter from Zopa Italy, Dec. 27th)

2007 was an exciting and eventful year in the development of peer to peer lending. Looking back these were the highlights:

• February: Boober.nl launches the first p2p lending service in the Netherlands.
  Prosper.com raises required borrower credit score to 520 and introduces other major changes
• March: Smava.de launches German p2p lending service
• April: Fairrates.dk offers person to person lending in Denmark
• May: Lendingclub.com launch in the US, initially limited to Facebook members
• June: Prosper raises another 20M US$ VC. PPdai p2p lending launch in China
• July: Globefunder raises 1.5M US$ VC 
• August: Boober is temporarily forced to stop lending by financial authorities. MyC4, which allows lenders to fund microloans to African entrepreneurs, grows steadily while still in private beta 
• September: Kiva sold out after extensive media coverage.
• October: Microplace launches with microlending. Microplace is an Ebay company. Australia gets peer to peer lending through iGrin. Zopa UK launches 'Zopa Listings'. Prosper portfolio plans introduced. A Prosper SEC filing is the first step towards a secondary market for Prosper loans
• November: Boober and Zopa launch in Italy. Prosper reaches 100 million US$ loan volume.
• December: Zopa US launch. Lendingclub goes nationwide. Canadian Communitylend receives 2.5M VC. In Sweden Loanland is the first p2p lending service.

I will write another article on which trends to expect in p2p lending in 2008.

I explored the new Zopa US site today. While the layout resembles the UK site the process is totally different.

Borrower's view

Use as a borrower is pretty straightforward. First sign up and then request an online quote.

After several seconds waiting the borrower is presented with the interest rate for his loan request.

Lender's view

For a lender things are a little more complicated. After deciding how much is to be invested, the lender must choose at least one borrower.

Using a sliding marker the lender then can select his desired interest rate (max. 5.1%). The lower the interest rate the more "help" the borrower gets on his loan.

Today already more then 310 users signed up at Zopa. When logged in, it is possible to browse other member's profiles. A profile can contain photos, long descriptions and integrate an (external) blog. An interesting example is Scott's profile, containing some informations on the history of Zopa US.

Over at thebankwatch Colin is wondering if the US model of Zopa will provoke interest.

What do you think of Zopa US? Post your impressions and experiences and discuss them with other users.

According to the Wall Street Journal p2p lending service Zopa will launch in the US next week. Zopa has been established in the UK since 2005. The long announced US start had been postponed several times due to regulation issues.

In the US Zopa will partner with six credit unions. Lenders will benefit since they can be sure to get their principal back - deposits are insured up to $100,000 per member. This is new for p2p lending, where lenders usually carry the default risk (only Dutch p2p lending service Boober.nl guarantees for certain credit grades the bulk of the pricipal via insurance against default.
According to the WSJ article neither lenders nor borrowers will have to pay fees to use Zopa but have to sign up with one of the six participating credit unions.

An article on Netbanker.com already spoke of congestion, since Globefunder and Loanio will launch at a later stage and Prosper, Lending Club and Virgin Money are active in the market.

What's your opinion on this? Post your thoughts in the wiseclerk forum!

After half a year of waiting preregistered users have been informed that Zopa Italy will launch November 14th. To encourage initial funds transfers, Zopa offers incentives (waived commissions) for the first 100 lenders. Read this earlier article for background and today's Zopa Italy blog post.