Smaaz’s Blog

Cut out the Bank - Loan 2.0

November 26th, 2006

Just came accross the finance co-op network of the UK company Zopa.
Zopa is an internet business that introduces borrowers to private lenders and cuts out the bank. Since the credit sum can be distributed on several credit givers, the risk is reduced. So the system of Zopa is different to the loan system of the big banks:

“At banks, people who have spare money put it into an account. The banks then use it for lots of different things. Some of it they lend to people who need to borrow. Some of it they gamble on the price of tin or the yen depreciating. Some of it they use to make their branches nice and pretty to attract more customers. And they make a lot of money doing all this, but only ever give their customers a comparatively small amount of interest.

Things work differently at Zopa. People who have spare money lend it directly to people like them who want to borrow. There are no banks in the middle, no huge overheads and no unethical investments.”

Their service is already used by more then 100,000 members and will be introduced in the US soon.

Entry Filed under: Internet