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.

Consultancy Gartner predicts that: "By 2010, social-banking platforms will have captured 10% of the available market for retail lending and financial planning". Not surprisingly Zopa is happy about that forecast. I think this is an over-optimistic outlook but James Gardner of BankerVision (working at Lloyds TSB bank) who also thinks it is aggressive points to the example of Paypal, which has been underestimated years ago. A more supportive view comes from Antony Mayfield while taking Zopa as example.

So far there are no p2p lending services active in Spain. Manuel Ángel-Méndezwrote a comprehensive article on the situation in Spain for El País. Some of the key facts from this article:

• Giles Andrews, of Zopa, confirms: "We have had conversation with several companies in Spain"
• Pol Navarro, director of innovation at Banc Sabadell,thinks that p2p lending will not be a short term threat to banks. "it is to early to tell if p2p lending will be a successul business model in Spain"
• Banking organisations expect, that p2p lending will profit from the introduction of a personal identification number (digital DNI) which will be introduced within the next 18 months. Fernando Alfaro of Bankinter sees to chances for p2p lending services: low costs of entrance (IT costs) and millions of immigants in need of loans, that do not have a credit history

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)

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!

Lenders at Zopa do not (yet) select an individual borrower but rather select a market and a rate at which they want to lend their money. This is matched to borrower demand and if a match is found, money is lend out.

There is a 3rd party site tracking the development of the Zopa demand volume and charting it (daily, weekly, monthly, yearly). Recently the amount requested has gone down in most markets.

(Source)

Tuesday I wrote about Zopa's plans for Zopa listings. Now a preview of how the new Zopa listings will look is available. With this feature Zopa will take the step from anonymous borrowers to a more personal look with borrower listings and profiles. To create a listing borrowers will have a credit grade of at least C.

I looked at the preview today and found the resemblance to Prosper.com layout striking in many points. The listing overview will look like this:

The loan listing itself has photos, a loan details section, a personal profile section and borrower information. Furthermore it will have a Questions and Answers Section allowing the lender to ask questions. Looking at the following example the forecast graph in the upper right looks exactly like the same feature Prosper offers:

The 8 page preview description gives more example screens of Zopa listings, which Zopa says it will introduce within the next months.

Lender feedback (which is limited so far) has been mixed.

With this changes, should the Prosper & Zopa merger that Jeff & Heather wish (it is really only wishful thinking!) ever happen, then at least the layout question seems decided now.