Category:Social Lending

The infatuation with blogs, the rise of citizen newspapers, the rebirth of consumer associations change deeply the relationship between the banks and their customers. This new ecosystem gives more power to customers. The Internet users have more technical solutions to run mortgage simulations or to compare the different offers on a loan.

New online services have already appeared where online lenders and borrowers can meet. These Social Lending services or P2P Banks (peer-to-peer or people-to-people) grow their success on lower rates and quicker processes.

Traditional banks give credit only to people with an excellent solvency profile. Social Lending services on the contrary lend to borrowers with good, or even mediocre profiles. And the average default on repayment has been lower than the bank-industry, so far. How do they achieve this ? Emulating auction sites like, the borrowers and lenders assign scores to each other. Thus each participant has a strong incentive to uphold his commitment in order to keep a good score and to continue being part of the system.

-- Feb, 2010 edit