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P2P lending levels up… November 3, 2007

Posted by James Webster in : web, finance , trackback

At the end of a previous post on microfinance and P2P lending I mentioned the US firm named Prosper. Now TechCrunch reports that they have submitted a proposal to the SEC for a secondary market for the loans that Prosper helps originate. I wonder if an OTC derivatives market won’t be too far behind…

I also wondered when Australia and New Zealand might see such an operation; a few days ago Finextra reported on iGrin which has been established by a former Commonwealth Bank executive.

These startups are small at the moment but are representing a growing threat to the traditional intermediaries. From the Finextra article:

Research released earlier this year by the Social Futures Observatory found that peer-to-peer social lending networks represented a serious threat to the traditional banking industry. The UK study found that 74% of Brits would consider borrowing or lending through an online “social lending” community, and that as many as 61% don’t trust their banks.

Meanwhile more microfinance ventures have started up:

As a keen “lender” via Kiva (here’s my Kiva portfolio) I was curious about the differences between Kiva and MicroPlace. Josh also linked to an article on WorldChanging which provides some insight into the differences:

Are Kiva and MicroPlace competitors? Yes and no. On the one hand, they compete for lenders and have similar models.

On the other hand, Kiva is filling an unmet need in terms of providing a direct, peer-to-peer portal on which lenders and borrowers can connect. MicroPlace, meanwhile, is more businesslike - it offers a portal where profit-conscious investors can get involved in microfinance without totally compromising on rate of return.

With the rapid growth in these microfinance portals I think it might be time for The MIX Market to add them to the list of organisations that they monitor.

Comments»

1. Jason Yip - November 3, 2007

Another major difference is that you can’t invest at MicroPlace unless you have a US Tax ID or SSN