Posts Tagged ‘Zopa’

Prosper turns two; P2P Lending accelerating

March 17, 2008

I’m a little bit late in blogging a happy second birthday to Prosper, but hey, better late than never. It’s interesting to me that there are many (perhaps even a majority of) people in the financial world who talk about Prosper as an interesting “experiment” that may or may not work. Let me attempt to blog yet again, that Prosper IS working, and growing at a rather stunning rate, right at this very moment. (Sadly, many financial professionals are probably still not familiar with P2P Lending, two years after its U.S. launch, and three years after its British launch.)

There are many who are skeptical, and rightly so, about making unsecured loans to strangers via Prosper. But let’s look at the facts. At Prosper’s current growth rate, they will probably surpass 1,000,000 members before the end of the year, which, if it were a credit union, would make it the third largest in the United States. When Prosper celebrated its second birthday on Feb 13, this year, it had 580,000 registered members, and has done $117 million in loans. (At that membership, Prosper would already chart in at sixth on the list of largest credit unions, behind Navy FCU at 3 million members, SECU of NC at 1.4 million members, Pentagon FCU at 770,000 members, and The Golden One CU at 680,000 members, and Security Service FCU at 630,000 members, and ahead of Boeing Employees CU with 530,000 members).

Clearly, there ARE people who are embracing online P2P lending, whether it’s Prosper, Zopa, or Virgin Money.

Last month, Jim Bruene of NetBanker blogged a new development at Prosper, which aims to cut default rates through social capital, namely personal recommendations. This looks to have proven successful so far, and is a clear example of direct monetary value associated with social capital.

The idea that national credit unions could exist with a defined target market is one that Jesse Robbins indirectly voiced with his Building the Black Rock Credit Union blog, and later Tim McAlpine at Currency Marketing articulated, and Ron Shevlin and the CUSkeptic satirized. Well, in a certain sense, Propser has already brought this concept to life via its borrowing groups. Just a cursory glance at the community reveals groups for entrepreneurs, Harvard alumni, Vietnamese Americans, musicians, military veterans, artists, teachers, restaurateurs, personal financial advisors, health care professionals, and even Apple fans. (Here’s one for folks who are LGBT). In other words, just about every type of group that credit unions were created to serve, but with a much deeper and richer variety, and with a national horizon.

As a side note, in researching this post, I discovered that Javelin Research says that online P2P lending may reach $159 billion by 2012.

Props to Doug True for working with Zopa to offer NCUA-backed P2P Lending.

Congratulations Credit Unions, on a Century of Service

March 12, 2008

I have the great honor and pleasure of talking to credit union professionals all over the nation. The subject of the proud history of CUs, holds special meaning to me because I had worked with the movement for about ten years before I learned ANYTHING about its incredible history. I certainly had no idea that the movement started in my backyard, a hop skip and jump across the border, in Manchester, New Hampshire.

I gave a talk on social media and World 2.0 this morning to a group of about forty credit union marketing professionals from Massachusetts, Rhode Island and New Hampshire at the CU League’s headquarters in Marlborough, Mass. I asked about the movement’s founding, and it was wonderful to get a detailed answer. In our presence was a representative of that very first CU, Andrea Pruna of St. Mary’s Bank. Not only did she know the date by heart (November 24, 1908), but she let us know about a wonderful section of their web site devoted to this, the Centennial Year of Credit Union service. I encourage everyone to check out Celebrating 100 Years for a terrific look at the amazing road we’ve traveled so far.

This is one of the reasons I’m especially excited that BarCampBank NewEngland will be held in America’s Credit Union Museum on April 5. The museum is the actual house where St. Mary’s Bank first began operations 100 years ago, out of the home of Attorney Joseph Boivin, who served as the CU’s President. If you listen very carefully, you may hear the whispers of the generations that have preceeded you when you stand in the parlor of the building.

Shout-outs to so many of the fabulous credit union marketers who came today. Thanks to Jon Reske and Anne Pinkerton from UMassFive College FCU, Mark Vautour from Telephone Workers CU, Deena Bernier from NMTW Community CU, and Debra Perrin from Southern Mass CU. I’m not good with names, so I haven’t remembered those who I met for the first time, but thank you also. It was fun that we had four one-billion-dollar CUs represented as well, Greylock FCU in the Berkshires, HarborOne CU in the South Boston area, DCU of the Worcester area, and Navigant CU in RI. Thank you to Rob Kimmett for organizing a great event and inviting me, and it was wonderful to catch up with CU whirlwind Bonnie Doolin.

My presentation today included demonstrating and explaining Twitter, Facebook, blogging, and showed examples from Shari Storm and the Verity CU team, William Azaroff of Vancity CU and Change Everything, Ginny Brady, board member of UFirst FCU with the Boardcast, and Tim McAlpine of Currency Marketing with Larissa Walkiw, spokesperson for Young and Free Alberta, and her infamous Credit Union Difference video part one, currently at 16,228 views. On the topic of Facebook, I have started writing a paper on the Facebook as Marketing Engine and plan on publishing excerpts to this blog. For those interested in checking out twitter, here’s the one-page PDF of Twitter Tips.

I also touched on Peer-to-Peer Lending (P2P Lending), Prosper’s amazing growth rate, and how CUs can participate by getting in touch with Doug True, SVP of Lending, at Forum CU. Doug has been instrumental in having P2P Lending company Zopa partner with CUs to offer NCUA-insured loans and investments.

P2P Lending launches in Canada

February 13, 2008

P2P Lending has been in Great Britain since 2005 in the form of Zopa. Prosper launched a year later in the U.S., followed by Lending Club, Circle Lending/Virgin Money, and Zopa in the US. I’ve checked in with Prosper from time to time, and as I’ve reported before, it’s growing at an astonishing rate.

Now, William Azaroff of Vancity CU and Jim Bruene of NetBanker report that today IOU Central has launched, giving Canada its first forum for P2P Lending.

Rock and Roll, Baby!

February 6, 2008

Ron Shevlin, Ben Rogers, and Tim McAlpine are writing about P2P lending. For those new to the P2P lending concept, know that it is already well-established, and growing rapidly. I will repeat: If Prosper keeps on its current pace of membership growth, by the fourth quarter of this year, it will have a membership north of one million people. That would make it the third largest credit union in the United States, if it were a credit union. This is happening NOW. I will write more about why P2P lending is so powerful, and what Zopa needs to do to have a chance against the Prosper juggernaut in a future post. But now I turn to rock and roll.

It’s time for credit unions to stop playing copycat and come up with completely new avenues of awareness and revenue generation. As Tim mentioned in his post, in the music world disrupted by sharing technology available to the millions of people, innovation came in the form of iTunes, Rhapsody, etc. Did you know that iTunes has sold 4 BILLION songs? At 99 cents per song, you do the math on total sales. I don’t know how much money the record studios ever made, but I’m guessing Apple would have a seat at the table at the least.

However, we don’t need another iTunes. Wal-Mart tried to copy with a lower price competition, and that effort has failed to put a dent in the Apple behemoth. What credit unions need to do is invent the financial equivalent of the video game Rock Band. Did you know that 2.5 million add-on songs were sold in the first 8 weeks of the games release? That’s double platinum, baby! This is a classic example of a razor and blade business model. And in this case, the razor isn’t even being given away for free, it’s at a reasonable price. (Side note – I recently learned that Guitar Hero and Rock Band come out of research into better learning methods at MIT’s Media Lab.)

Because of the runaway success of Rock Band, real bands are now clamoring to get their songs included. Not only for the notoriety, but I would wager that sales of included songs are significantly increasing. I just bought a great song (I’m So Sick by Flyleaf) from iTunes last night that I was not aware of until playing it in Rock Band.

Let’s find the financial services equivalent of this new phenomenon. We have all the ingredients. We just need a new recipe. Srsly.

Earthquake rocks financial industry

February 11, 2006

Did you feel the earth change on Monday, February 6, 2006? Feel the tremors?

As of this date, the financial world has been forever changed. The world of borrowing and lending has now been transformed by the power of the internet, the power of peer-to-peer networking, upon which companies like eBay and Napster have been wildly successful. (Napster counted 60 million users at its peak).

Zopa is a peer-to-peer lending network in the U.K that has existed for a little while now. They want to someday have a U.S. presence. Well, another company has beaten them to it.

There is now a U.S. based internet peer-to-peer lending network: Prosper.

And they even have Groups that look eerily like credit union’s original field of memberships or SEGs. People are already talking about the pros and cons of Prosper.

What does this mean for credit unions? Time will tell. One thing is for sure: technology has fundamentally changed the way the entire world works over the past ten years. This new peer-to-peer technology, now applied to the financial industry, has the power to transform borrowing and saving forever. Zopa, and now Propser, have in a certain sense, snuck in the back door. While credit unions have been focused on growth and offering more services, a non-credit union company has come in to fill the void left by credit unions taking their eye off their fundamental reason for being: pooling savings to make loans to people with a common bond. Why didn’t a credit union develop this new Prosper-type network? It is because they were too busy trying to compete with banks and become more bank-like? Or too internally focused to take the time to figure out a way to use the internet to create a radically new way of doing business?

Today is T + 5 days and counting.

So that’s the bad news for credit unions. Is there any good news? The good news is that there is still something to be said for face-to-face transactions, no matter whether you are a borrower or a saver. There is still a certain degree of security knowing that professionals are handling your money and screening borrowers (if you are a saver), and that you can talk to someone and explain yourself if you are a borrower. Not to mention that your money is backed by the full faith of the United States government. There is still opportunity for smart, savvy companies to find their own unique niche in the marketplace. If you are a credit union, have you found your niche yet? Do you have an unbreakable emotional connection with your best members?

Thanks to Trey Reeme’s Open Source CU blog for making me aware of the launch of Prosper.


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