Laurel Papworth

There are now three peer to peer or social lending banks in Australia, as far as I can determine. Well Fosik hasn’t launched yet… but it’s the latest one I have found:

Here is a chart:
Sorry it’s unreadable, it’s the same on their site…

So instead of asking your bank manager for a loan, ask the social network. An eBay of loans - except there is not one “winner” – 99 people might finance 56% of your loan. Fosik is under Beta Test so I’ll show you the one from Prosper.com
Shows the % of the loan so far funded, with number of bids on the loan. More details from Prosper (which I think is coming to Australia soon):

• Borrowers create a listing and set the interest rate they are willing to pay. Prosper facilitates personal loans, home improvement, auto loans and more.
• Lenders place bids as low as $50 toward the loan at the rate they are willing
  to receive.
• Bids with the lowest rates are combined into one simple loan to the borrower.
• Loan proceeds are deposited directly into your bank account.

My previous blog post will tell you exactly how the Australian banking industry is coping with peer to peer banking. Not well, I believe. But what you need to know is that Business Week says the industry will be worth 10.6 billion in 2009 – and that igrin.com.au and peermint.com.au are the other two peer to peer banks in australia as far as I know.

The other blog posts since July 2006 are:

• Social Lending and Social Banks (May 2008)
  

• Social Network Economy or new Digital Economy (March 2008)
  

• Australia: Social Lending in social networks (November 2007)
  

• Social Lending – peer to peer banking in Australia (November 2007)
  

• Citzen bankers and Peace Prizes (October 2006)

• Two Sunday Night Quickies (July 2006)
  

Enjoy – this is a model that will play with Banks in the same way that Social Media plays with traditional media. And the long tail played with buying books and CDs – Amazon anyone? And … well, wait and see! In fact using the social network to provide services and taking a clip of the transaction will also change recruitment and telecommunications and … well every sector of our economy.

The challenge DownUnder will be Australia vs globalisation. Once they sort out local regulatory stuff, would a big social bank launch here? I heard yes. Or is there a way we Australians can take out overseas loans easily – would the social banks let us use the US or UK sites? With Peermint and Fosik not launched, it’s more likely that Prosper and Zopa will take off, IMHO. Plus Australians are a little … conservative? Not the right word but you know what I mean – we need don’t have the same culture of risk and ‘make a quick buck now’ that Britain and the US have, and might hang back on offering finance to social networks? Incidentally, defaults on social loans are lower than those of traditional banks!

EDIT: I forgot to mention that as well as Virgin Money investing in CircleLending, eBay has now bought MicroPlace social lending site, which is more like Kiva (peer to peer funding for poor socio-economic countries).