P2P Lending Emerges
Peer-to-peer technology allows for a whole bunch of things, most notably the sharing - stealing? - of music and videos. But P2P technology is also being used for other interersting applications. A friend of mine, for example, has been working way on a service called BetBug that enables people to make bets with each other rather than using a bookie. Another P2P market starting to emerge is personal lending. The idea is rather than seek a loan from a bank, you borrow it from someone looking to make “an investment” with excess capital they want to deploy.
In the U.K., which seems to embrace P2P technology with more enthusiasm than other places, Zopa.com has attrated more than 140,000 users, while in the U.S, Prosper.com has 240,000 users and already facilitated $50-million in loans. For Canadians looking to get into P2P lending and/or borrowing, CommunityLend hopes to fill the gap later this year. Started by Colin Henderson, who used to head up Internet banking at the Bank of Montreal, and Michael Garrity, who used to be v.p. of marketing and sales with ePost, CommunityLend is working on getting the necessary regulatory approvals, as well as some venture capital. Here’s CommunityLend’s pitch:
“CommunityLend is exactly what it sounds like. It’s an online community where people lend money directly to other people. It is an exciting and unique lending exchange for Canadians that will revolutionize the way lending works in Canada. We are not a bank, in fact, we’re better. We are a lending community made up of your community. You can set your own rates, payback periods and meet some cool people along the way, all without paying irritating banking or investing service fees.”
It sounds like an interesting concept, although I’m not sure how enthusiastic Canadians will be about embracing a P2P financial service that could have a fair bit of risk involved. After all, we’re a country of savers who think mutual funds are the greatest investment tools since sliced bread, and look forward to buying Canada Savings Bonds despite the fact the interest rates on them are next to nothing.
For more on CommunityLend, check out this story in yesterday’s Financial Post, as well blog posts by Net Banker and William Azaroff.
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POSTED IN: Entrepreneurs
4 opinions for P2P Lending Emerges
Colin Henderson
Apr 8, 2007 at 1:59 pm
Thanks for the post, Mark. We are enjoying being part of the Canadian internet scene, and plan to have news updates over the coming weeks, as we reach some key milestones.
Colin
William Azaroff
Apr 8, 2007 at 10:46 pm
Hi Mark,
I find this space so interesting. It’s a great example of a starfish up against a spider. I also wonder whether Canadians, at least enough of them, will be interested in shaking the regulatory binds that banks offer, or whether our conservative nature will keep us in place. This much I know, the fact that Colin’s involved makes me think it’ll fly. I can’t wait to find out.
Thanks,
Wm
Doug Lavoie
May 23, 2007 at 10:07 pm
I believe it is about time someone in Canada has stepped up to the plate to offer a service comparable to Prosper in the US. All you need to know is the statistical percentages of canadians who feel secure using their online banking services and online savings services such as HSBC and ING Direct. This, in my opinion will be a HUGE success. I can not wait to start lending!
Mr. Cheap
Jun 14, 2007 at 12:42 pm
I’m glad someone’s doing this in Canada! I love Prosper (actually set up an account on it with an American friend and have been borrowing and lending on it).
I wanted to launch a similar service in Canada, but couldn’t get the resources to pull it off. My hats off to you Colin and crew!
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