Social lending takes next step in the UK
 The UK-based peer to peer finance service Zopa (see here for a previous report) had already been “cutting out the middleman” between lender and borrowers for some time by letting lenders specify what rate they want to lend at and matching them to identity and credit-checked, risk-assessed borrowers willing to pay that rate.
Now Zopa have extended their ’social lending’ service with the new Zopa Listings. As Mike Butcher writes in his post on TechCrunch UK, Zopa Listings
allows individuals to ‘pitch’ online for the loan they want, giving details of what they are borrowing for, the interest rate they are seeking and their own personal circumstances. Lenders then choose between these individual borrowers and bid, eBay-like, to lend to them, offering an amount and the interest rate they are prepared to lend at. A listing can include photographs and (eventually) a video. When the listing closes, if the full loan amount has been achieved and the borrower is happy, it will go ahead at the aggregate interest rate of all the offers. If the amount is not achieved, the process stops there, although the borrower will have the chance to re-list. Lenders can bid with a lower interest rate offer to any listing that has yet to close, even if the loan amount is fully covered – keeping the competitive process live until the very last moment.
The personal ‘pitch’ borrowers supply is a nice enough addition to the identity checking, credit checking, and risk assessment Zopa already did. The interest rate bidding could be a huge benefit to borrowers, providing enough lenders get involved and are willing to compete this way. Whether this personal pitch and interest rate bidding approach will become the eBay of peer to peer finance remains to be seen, but in the meantime it is an interesting development in ’social lending’ in the UK.
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