Peer-to-peer disruption III: Bye bye bank

After turning the music- and telephony industries upside down, peer-to-peer technologies are moving into the financial markets. The principle is simple. Accept the fact that there are two kind of people. The people that zopalogo.gifzopalogo.gifhave money and the people that need money. In the old days we would think that people at the bank are the people to turn to for money but not in the internet era. Today everybody that has money can ask for it to anybody that has it and smart internet applications form the virtual middleman.One step back before we speed ahaid. 

What do music, telephony and money have in common?
They are all stored in bits and bytes and they are distributed over the internet. By using peer-tp-peer technologies new ways of lending money are introduced and we all become our own banks.

Peer-to-peer banking big business zopalogo.gifzopalogo.gif
Back in 2005  Zopa was the first to surface on the internet. They started their lending site in the UK. The Zopa founders understood that money business is all a matter of trust, networks and computers. Zopa explains itself as: “the world’s first social finance company“. They pioneered a way for people to lend and borrow directly with each other. They thought it there mission to give people around the world the power to help themselves financially at the same time that they help others. Zopa’s makes money from charging borrowers an exchange fee of 1%. If borrowers take out repayment insurance on their loans Zopa receives commission from the insurance provider. Lenders aren’t charged by Zopa. This revolutionises the financial world as the big margins banks charge are wiped out.

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That this was not a whimp from some idealistic programmers. In july 2007 the estimated number of peers involved in lending was 1.3 billion. Zopa has not been lonely as Prosper (US),  Smava (German) and the Dutch Boober offer like wise services. In China, well known for copying, PPDai launched in july last year. For a quick course in chinese lending figure who is having money and who aint?

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P2P lending changes slightly from country to country but enters a very different market in the People’s Republic. In China personal credit ratings are virtually non-existent, making lending to strangers riskier business. PPdai therefor primarily aims to standardize and facilitate loans between family and friends, which are more common in China than personal loans from banks.

The banking world is next in line to meet innovative technologies that bring the power to the people or better take the money from the people to the people without banks in between. And the banking industry is working hard to loose it’s trust espcially with US and French banks blundering billions of dollars simply down the drain. Whow saving were in those banks.

Disruptive markets, next week the disrupted media world.

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