A new Online Banking Report has been published titled 'Online Investing Communities: Will social networking revolutionize saving & investing?'. From the announcement: 'We believe social networking will eventually play a large role in online investing, and evidently we are not alone. We found 54 companies involved in investment information exchange and only six of those have monthly traffic of 100,000 or more.'

Jim Bruene's Netbanker reports on person-to-person lender Prosper.com's new marketing initiatives including its new slogan: "Let's bank on each other." More on the Prosper Blog.

In an article titled 'Where Either a Borrower or a Lender Can Be', Jane J. Kim writes for the Wall St. Journal about person-to-person lending networks (like Prosper.com, Lending Club.com and Zopa.com) and how small business owners are increasingly turning to those networks as access to bank credit has become more difficult.

Update: Jim Bruene gets this one right over on his NetBanker blog - it's actually about person-to-business lending!

Springwise notes that person-to-person lending provider Fosik has launched in Australia.

Barron's takes a look at the person-to-person lending market including Prosper.com, Circle Lending, and Lending Club.

Jim Bruene's announced the latest edition of his Online Banking Report newsletter - this issue titled on "Person-to-Person Lending 2.0: Disruptive service or market niche?".

From the abstract: "Person-to-person lending is the perfect product for the Web 2.0-social-networked consumer. Why, then, has growth been relatively slow compared to other networked services? Because it’s a difficult business. Not only are P2P lenders competing with 20,000 other financial institutions for good borrowers, the are up against thousands of investment alternatives for funds to lend, all the while waging a fierce battle with fraudsters and deadbeats. It’s not a business for the faint of heart. "

Zopa has launched what it says is "an online community that offers unprecedented benefits to borrowers and investors, by offering safe, market rate Zopa CDs to individual investors that are linked to lowering the payments of an individual borrower’s unsecured personal loans."   » Continue Reading

In an article titled 'Online Lending Gets Easier and Safer', Jane J. Kim writes for the Wall St. Journal about Zopa's entry into the US market. Rather than doing everything itself, Zopa will be "working with several credit unions to offer person-to-person loans to prospective borrowers."

Prosper.com has updated its People-to-People Lending Market Survey to reflect results through the end of September. In September, $5.4 million in loans were funded at an average loan size of $7,175. Over average over the month, 2,298 borrowers were looking for loans. A market commentary by CEO Chris Larson addressed the question of whether the Prosper lending marketplace anticipated the Fed's recent 50 basis point cut in interest rates.

Prosper has introduced its first monthly People-to-People Lending Market Survey that provides key statistics including: membership and loan volume statistics, marketplace returns; borrower rates; mix of prime, near prime and sub-prime loans, noteworthy marketplace statistics/trends and a market commentary by Chris Larsen, Chief Executive Officer of Prosper.

BankServ has announced that Lending Club's collaborative person-to-person (P2P) lending platform is built upon BankServ's Magex Payment Platform, ACH reporting and cash management solutions.   » Continue Reading

In an article titled 'Options Grow For Investors To Lend Online", Jane Kim writes for the Wall St. Journal about new web-based services enabling investors to lend money to strangers online. She reports that Prosper.com has about $60 million in loans outstanding so far this year and cites the Online Banking Report's estimate that a total of about $100 million in loans will be originated by all providers this year.

Claus Lehmann writes for Springwise about PPdai, a new peer-to-peer lending business in China saying that "PPdai primarily aims to standardize and facilitate loans between family and friends, which are more common in China than personal loans from banks."

Hiawatha Bray writes for the Boston Globe about peer-to-peer lending and how its another example of how "the Net reshapes nearly every business it touches." He reports on Zopa, Prosper, CircleLending and Lending Club - and notes that "peer-to-peer bankers face tough challenges."

James Gardner, Head of Innovation and Research in Group IT at Lloyds TSB in London, muses about personalization on his blog: "It is users themselves, everywhere else, that are deciding not only how things are personalised, but also what content should be shown in the personalised context. We can see where social finance is going when examining Mint, Wesabe and others of their ilk."

Lending Club, a Sunnyvale, California-based startup, has launched a new person-to-person lending service on the social networking service FaceBook. From the company's web site: "Lending Club is an online lending community where people can borrow and lend money, bypass the banks, and get better rates. By working together, members can borrow money more easily and at a better rate than they would get from a bank, or invest in a pool of loans at higher rates than those served by savings accounts or CDs." Lending Club is using the recently introduced Facebook Platform for integration into Facebook. Read more on the Lending Club blog.

Virgin USA has announced that it has acquired a majority stake in CircleLending, Inc., a financial services company that "pioneered the business of managing loans between relatives and friends."   » Continue Reading

Personal finance columnist Eileen Ambrose writes for the Baltimore Sun about Prosper.com - saying that "with people becoming their own publisher by blogging, or creating their own videos and political commercials on YouTube, it was just a matter of time before they became their own banks."

The Get Rich Slowly blog has an interesting post titled "What’s It Like to BORROW Money with Prosper?" written by Tricia (who also writes her own blog titled Blogging Away Debt) describing her experiences as a borrower using Prosper.com to find other folks willing to lend her money. She describes her experience seeking to borrow $3,500. She posted a starting interest rate she was willing to pay of 12%. As it turns out, lenders competed for her business and she ended up getting an interest rate of 9.9% from a group of 13 Prosper lenders.

Zopa has announced that Douglas H. Dolton, formerly CEO of Chela Education Financing, has joined the company as Global CEO. In addition, Zopa has secured additional investment of $12.9 million from its venture backers, in a Series C round led by Bessemer Venture Partners.   » Continue Reading

Zopa, the UK-based person-to-person lending marketplace, is celebrating its second birthday. An article in Easier Finance reports on Zopa's progress to date - more than 135,000 members have joined Zopa and, perhaps most significantly, very few Zopa members have failed to pay back their loans – Zopa’s default rate is 0.2%. More birthday celebration on the Zopa blog.

The Innovate blog written by two students at Stanford's business and design schools has posted a podcast interview of Chris Larsen, CEO of person-to-person lending company Prosper.com. "In this podcast, Chris chats with Julio and Min Li about Prosper's innovative vision, its unique challenges as an eBay platform for money (check out Prosper's cool tools for academics and researchers for performing case studies on its model), and the fine balance between the countervailing forces of transparency and privacy in the world of Web 2.0."

Jessica Anderson writes for Kiplinger.com about being a person-to-person lender on Prosper.com - saying it "offers financial rewards with a dose of good karma."

CircleLending has announced an innovative private lending product, Family Advantage that allows families to "arrange private loans that feature the benefits of traditional reverse mortgages without the drawbacks. Family Advantage loans are more flexible and eliminate many of the costs and restrictions those who need a reverse mortgage face."   » Continue Reading

Celebrating its one year anniversary, Prosper.com this morning announced a series of enhancements to its service including bringing customer service in-house in San Francisco (from offshore), enabling borrowers to gain credibility from personal endorsements by friends and family, and providing lends with six additional credit data fields from Experian to help evaluate a borrower's loan request.

Yesterday, Marketplace, a business news radio program from American Public Media, had a segment all about peer-to-peer lending - in particular about Prosper.com. A transcript of the segment is available online along with the audio that you can listen to online. The segment is introduced with the comment: "banks, credit card companies and those payday loan centers make billions of dollars every year lending us money. But why should they get all the profit?"

Annys Shin writes for the Washington Post about person-to-person lending at Prosper.com. "Instead of selling your money to a bank to see the bank sell that money to someone else at 19 percent, why can't I have some of that money?" chief executive Chris Larsen said.

ABC News has a feature story this morning for consumer's about how to make the most of credit cards based upon an interview on Good Morning America with Ron Lieber, staff reporter for The Wall Street Journal. Lieber recommends borrowing first from family members and never, if you can avoid it, from credit card companies. In between he suggests considering Propser.com, the person-to-person lending company.

Celent has published a new report titled "Up Close and Personal with Online Lending" that examines the state of online lending and what banks will need to do to obtain market share. “Perhaps the ultimate example of just how intensely personal online lending has become is peer-to-peer lending. Its customers often view their financial activity as a means of self expression. For these individuals, the personalization of online lending has increasingly meant the ability to choose who they borrow from, who they lend to, and what level of risk they should take in investing their money as their own lender. P2P lenders have demonstrated that a growing consumer lending market exists,” says Dan Schatt, co-author and senior analyst.

Jim Bruene writes on the Financial Marketing Weekly blog about the 2006 results for Prosper.com - suggesting that Prosper.com's revenues for 2006 were in the range of $300,000 - based upon a 1 per cent origination fee charged on almost $30 million of loans originated. Obviously, they'll need to grow that revenue number by a couple of orders of magnitude for this person-to-person lending business to be considered economically viable.

CircleLending brings mortgage services to the masses through structured private loans, providing services that reduce the financial risks, administrative hassles and emotional pitfalls of interpersonal loans.   » Continue Reading

The Center for Financial Services Innovation has announced publication of two new papers on alternative credit data. The first, "Market Interest in Alternative Data Sources and Credit Scoring" (PDF) by Katy Jacob and Rachel Schneider, investigates the potential interest in alternative data on the lender side, by interviewing senior lending officers and other key decision-makers at 23 major financial institutions. The second, "Accessing Credit: The Role of Private Loan Services for Underbanked Clients and Prospects at CircleLending" (PDF) by Katy Jacob and Helen Payne Watt, surveys users of CircleLending's pioneering process to formalize and automate private person-to-person loans, to better understand why customers chose this credit option, and how it effected their behavior.   » Continue Reading

Prosper has announced that its membership has topped the 100,000 mark and that it has generated more than $20 million in loans since launching in February 2006.   » Continue Reading

Kara McGuire writes for the Minneapolis-St. Paul Star Tribune about personal lending on Prosper.com. "In a recent report, Online Banking Report founder Jim Bruene predicted that, within five years, there could be as many as 100,000 person-to-person loans in the United States per year, worth more than $1 billion."

Zopa, an online exchange for person-to-person lending and borrowing, has announced it has named Phillip J. Riese chairman of Zopa board of directors. The company also announced it has received an additional $5 million in financing from Tim Draper, founder of Draper Fisher Jurvetson, and the Rowland Family. This adds to the $26 million previously raised from Bessemer Venture Partners, Benchmark Capital and Wellington Partners to fund the company's development.   » Continue Reading

Michael Clarke writes for the UK's ThisIsMoney.co.uk about Zopa's "zone of possible agreement" borrower/lender matchmaking service. Clarke says "Zopa claims that the service is like investing in another asset class, other than shares, property or cash, that will give a portfolio more diversification."

Prosper has announced that Paul Hazen, former Chairman and Chief Executive Officer of Wells Fargo & Co., has joined the company's Board of Directors.   » Continue Reading

TowerGroup has announced new research titled "Turbulence in the Global Economy: The Case for Peer-to-Peer Online Lending Exchanges" that finds that peer-to-peer online lending exchanges -- direct lending by investors to individual borrowers -- are emerging in the US and UK as an alternative platform to traditional savings and investment options, a trend they predict will have an impact on unsuspecting financial services institutions.   » Continue Reading

In an article titled 'The Virtual Moneylender", Farhad Manjoo writes for Salon.com about Prosper.com, "a new Web site allows you to borrow money from strangers in cyberspace. It may even free you from credit card debt and the usurers at the local payday loan center."

Jane Boon Pearlstine writes for the Wall St. Journal about some of her first hand experiences lending online on Prosper.com where she's made "more than 300 small loans at an average rate of about 21%."   » Continue Reading

In an article titled 'Will Zopa's P2P loans mean the death of the bank manager?", Tony Hallett writes from the UK for Silicon.com about Zopa's person to person lending services.

In a comprehensive report that, in our opinion, is a "must read" for senior bankers interested in important emerging competitive trends, the latest issue of the Online Banking Report examines in detail the person-to-person lending business being pursued by Prosper.com and Zopa.   » Continue Reading

Zopa has announced a $15 million Series B funding led by Bessemer Venture Partners and including existing investors Benchmark Capital and Wellington Partners. The additional funding will support Zopa's intended California launch.   » Continue Reading

Andrew Reinbach, editor of Electronic Payments Week, has recently written about Prosper.com and Prosper's CEO Chris Larsen. Here's Andy's analysis - posted with permission.   » Continue Reading

Prosper, highlighted earlier here on Payments News when they "soft launched" their web site, officially launched today calling themselves America's first people-to-people lending marketplace and comparing Prosper's approach to lending to that of eBay - a marketplace.

"Until now, financial institutions have controlled who is able to obtain credit and the rates people pay," said Chris Larsen, Chief Executive Officer and co-founder of Prosper. "Over time, this one-sided control has bred inefficiencies and excessive margins -- leading to higher rates for borrowers, and restricting people who have money to lend from entering and generating income from this vital and lucrative market."

Robert Hof of Business Week does an in-depth story on the Prosper.com Marketplace and compares its approach to that of eBay by matching small borrowers with lenders. Also, see our earlier post about Prosper.com.

One of the cool things about Zopa is their Zopa blog where they talk regularly about the stuff they're doing in revolutionizing the consumer finance space. We first wrote about Zopa last August.   » Continue Reading

Prosper.com, a new online marketplace for people-to-people lending, has a new website up and available tonight.

Read about how it works and the fees charged both borrowers and lenders. And, more about the management team and investors, several of whom were involved in the early days of eBay and ELOAN.   » Continue Reading

A colleague comments on our earlier mention of Zopa:

This is, after all, exactly what happened in the U.S. to the short term corporate lending market 20 years ago, when the commercial paper marketplace took out commercial banks as the primary source of liquidity for short term corporate financing.....

Eliminate the banking middle man -- that's what Zopa's about. Rebecca Jarvis reports for Business 2.0 on what the UK's Richard Duvall is up to with Zopa.   » Continue Reading