Social lending, the new face of monetary loans

Another way the social media are impacting “Business as Usual” Social Lending promises to disrupt the hegemony of banks and finance companies and  allow business to access money directly from potential investors.  In tight markets where finance is not freely available, direct person to person ‘face-to-face’ (via Skype?) loans could allow a new vibrant “angel investor” market to bridge the gaps between traditional finance with its high security and high interest fees and to become a genuine social investment phenomenon. Websites such as ‘kickstarter” the crowd-sourced start up funding platform are already generating larger and larger investments in creative startups. You can find a list of crowd-funding projects by country here:Finanzmarketing-Blog and read about a Capitec Bank initiative  Idea Bounty  South Africa

This report from on peer to  banking extends the ideas to larger businesses needs  by Sean Emery

Against the backdrop of a global financial crisis where people feel that the big banks have failed them, consumers are beginning to look at alternatives such as person-to-person or social lending.

This new person-to-person model of lending uses the Web to disrupt the financial services industry by directly linking people and groups who have cash to invest with people and even small businesses who want to borrow money. Consumers are able to lend and borrow money at more competitive interest rates than they could get from the banks and without the excessive charges and fees.

Few industries are as overdue a radical change as the banking sector. Banks have positioned themselves as middlemen between people who have money to invest and those who need to borrow money, earning plump margins and fat fees for the privilege. The amount of inefficiency and complexity in this market makes it as ripe for disintermediation through the Internet as travel agents and insurance brokers.

Rise in US, Europe

The market started to see the rise of the first major social lending marketplaces in Europe and the US around five or six years ago and, since then, they have grown from tiny operations into a major force in the global financial services industry. Gartner predicts that peer-to-peer lending will account for 10% of all outstanding consumer personal loans by end 2013.

In the US, peer-to-peer loans have eclipsed more than $1 billion since 2006 and social loan volumes calculated by the two largest players in the US are around $50 million a month and growing, according to a report by TechCrunch. In the last 30 days, these two lending marketplaces issued 5600 new loans totalling nearly $64 million, with a borrower average interest rate of 15.81%.

Read More



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s