Banking 2.0 (Or At Least a Start)

I’m not a huge fan of banks. While they’re (currently a necessary evil) – it’s hard not to think that they’re generally just a middle man taking a (substantial) cut for no real benefit. I mean if they provided a great service and made our lives easier we wouldn’t mind paying their price – but generally they’re as wedded to the 1.0 world as you can imagine.

It’s for this reason that peer to peer lending and micro-finance appeals to me. Micro-finance allows (generally Third World) entrepreneurs who would normally be unable to borrow anything, to utilise small amount of money from "financiers". The reports I’ve heard from the likes of Kiva indicate super low default rates, along with the satisfcation to be gained from helping someone claw their way out of poverty.

Peer-to-peer lending however is more directly a threat to banks as it seeks to facilitate the partnering of willing lenders with wanting borrowers. A lender states the amount they wish to lend and the rate they’ll lend it at, while the borrower does likewise. The peer-to-peer agency takes a small percentage of the transaction. Of course the vested interests (banks) and their supposedly neutral but actually supportive agents (central banks) do everything they can to make it hard for peer-to-peer set ups to get off the ground.

Local start up Nexx is one such peer-to-peer facilitator – it’s great to read that they’ve just raised 600k in angel funding that will see them through the regulatory and initial go-to-market stages for their business.

I’m sure there will be many hurdles to jump just in getting approval – but hand in there guys, unlike a huge majority of start-ups, your one is really doing good by doing well.

5 Comments
  • We have been kiva lenders for a long time – http://www.kiva.org/lender/leonie – and we have had one default, which was the company in (insert country) who was lending to the end people, not the people themselves.

    personally, I think for the 3rd world, this is a great way. For the 1st world, where the amounts are bigger, it’s harder to get the money, but a cafe in Madison, WI where we lives last summer did it, raising about $150K for something…..

    For us, it just gives us a great feeling, lending to people who want to do something to help themselves. To be honest, we havn’t put much INTO it of late, because they have all been paying up, so we have re-lent the amounts payed back…. :)

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  • The central bank/private bank model is well and truly history. It may take some time though but decentralised money systems are the future. They will be more stable and can self organise along systems principles.

    At the moment central bank responses have been to perpetuate a very sick machine which will bring further pain until its declared dead.

    So now is the time for alternative systems to spring up.

  • Hello there, as you are discussing peer-to-peer lending or social lending I thought I would share this slideshow with you that I built a few months ago.

    http://www.slideshare.net/sparkbouy/social-lending-v10

    There has also been some interest in Peer to Peer insurance but on a much smaller scale. There are a couple of slides in one of my insurance presentations that might also be of interest.

    http://www.slideshare.net/sparkbouy/insurance-trends-presentation

    i think we will see greater traction in the financial peer 2 peer space when the plethora of sites that try to help you budget start to promote these on-line options.

    Cheers

  • Nice presentations Chris.

    P2P Insurance is not something I had given much though to but will do now over at http://www.vortexdna.com

  • If you find Kiva interesting, you might want to have a look at the MyC4 concept too. Like Kiva, but lenders do earn interest. Open to residents of New Zealand, too.

    Claus
    Editor
    http://www.p2p-banking.com

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