Peer-to-Peer Lending for Retirement Savings?

Posted Friday, March 20, 2015 in Innovation by Patricia Seybold

I’ve been following a fascinating development in the U.K. Budget process this month. It appears that Britain may be on the cusp of legitimizing P2P Lending as an investment vehicle for tax-exempt retirement savings. If this happens, it’s likely that P2P lending both to consumers and to small businesses will increase dramatically. And, if the financially conservative Brits can do it, why not other countries?

Zopa homepage Peer-to-peer lending (the electronically-enabled kind) marks its 10-year anniversary this month. Zopa was the first business to create a really viable model that enabled consumers to lend directly to one another with low risk. Its innovation included spreading the risk. Each amount you loan was spread across small loans given to 50 different borrowers. Zopa has evolved and simplified its offerings over its 10 years in business. It has spawned hundreds of imitators and competitors. Zopa remains the leading P2P lender in its local market.

One of the things I most enjoyed about revisiting Zopa this week was browsing around their Zopa's customers’ forum. You can get a really good idea of how well a company is doing by eavesdropping on its customers’ conversations with one another, particularly when there are 10 years’ worth of conversations to mine. The Zopa Customer Forum provides a fascinating glimpse into the sociology of peer-to-peer lending over the last decade.

We first wrote about Zopa in 2006 (both in my book Outside Innovation and in a longer case study). In this new case study (which is available for download to Strategies’ and Technologies’ subscribers), we bring you up to date on the company and its evolution.

Zopa: Peer-to-Peer Lender Celebrates 10 Years
Spawned a Global Multibillion Industry; Still Going Strong
By Patricia B. Seybold, CEO & Sr. Consultant, March 20, 2015


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1 comment

    Jeff Conklin on March 26, 2015 at 6 a.m.
    Your piece about Zopa (which I hadn’t heard of) is fascinating, and reminds me of a quote I saw on Linked in yesterday. "In 2015 Uber, the world's largest taxi company, owns no vehicles; Facebook, the world's most popular media owner, creates no content; Alibaba, the most valuable retailer, has no inventory; and Airbnb, the world's largest accommodation provider, owns no real estate." (Marcella Shinder, Nielson) It sounds like a Zopa-like company might become the world's largest lender (investor?), without any capital. What is going on here? It appears there's a whole new niche in the economy for P-to-P coordination at scale. Is there a name for that niche? What does it look like when you take that model to its logical limit? Does it make large companies at risk of being replaced by networks of independent agents supported by coordination apps (i.e. Uber and taxi companies)?
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