Peer-to-peer lending services like Prosper got a new lease on life from the House of Representatives today, which included an amendment to move regulation of the space from the SEC to a new banking regulatory agency in a major financial reform bill.

Previously the SEC had claimed regulatory oversight over P2P lending, forcing services like Prosper to shut down while undergoing a process to register its loans as securities. The regulatory mess effectively stunted the nascent market; while Prosper and Lending Club made it through, Zopa decided to pull out of the U.S., and smaller services shut down or have yet to be approved.

However, if the Senate and President Obama approve the legislation, by next spring peer-to-peer lending could be overseen by the new Consumer Financial Protection Agency. Sure, it’s just swapping in a new regulator, but Prosper CEO Chris Larsen said he thinks it’s a better fit than the SEC, which is built to regulate investors, not borrowers.

Larsen, who saw his company go dark for nine months from October 2008 to July 2009, told us he’s ecstatic about the bill’s passage. “It declares that peer-to-peer lending is not a security, which we think was very obvious in the first place,” he said. Prosper was able to make it through because it had raised $40 million in funding from investors like Accel Partners, Fidelity Ventures and Benchmark Capital, but the shutdown was “quite painful and very expensive,” said Larsen. Now, with the legislation on the books, Prosper feels confident it can go out and raise more funding.

The Royal Bank of Scotland is now 70% owned by the taxpayer.  Note the word taxpayer and that means you and me.  Well, I suppose it might not mean you, as you might be in New York, New South Wales, New Zealand or New Caledonia.

But the dilemma will hit us all in the next few years as we struggle to get the economy under control.

In the red corner you have the public and the government, who for all sorts of reasons find million pound bonuses obscene.  And in the blue corner you have the Banks, who say that they need to pay these bonuses to attract the best talent, so that they make higher profits in complex and difficult to understand markets.

This excellent article in The Times sums it all up well.  The government wants to veto the bonuses and if they do, then the board of RBS will resign. 

The Treasury signalled last night that it was prepared to veto a £1.5 billion bonus pool at Royal Bank of Scotland in a move that could trigger the resignation of the bank’s board.

RBS directors have been advised by the bank’s lawyers to resign if a Treasury bonus veto means they are unable to run the bank commercially and in the best interests of all shareholders.

People close to the Treasury signalled last night that Alistair Darling would throw out any bonus plan at RBS that was much higher than last year’s £1 billion. “We would not expect to see any significant increases in bonus payments. I think most people would see 50 per cent as a major increase,” one Treasury insider said.

RBS is expected to make £6 billion in profits this year from investment banking, implying a bonus pool 50 per cent higher than last year.

Is this blackmail? Yes!  But is it sound business?  Yes!

It’s actually more complex than you think.

Take total tax.  Corporation tax on companies is lower than that for individuals.  So am I right in thinking that high bonuses might actually return more money to the government?  But that is a practical not an emotional response.

How true is RBS’s assertion that they need to pay the bonuses to get the right people to manage their investments? In my business life, I have often found that you have a lot more talent in a company than you think you have, but those in charge like to keep the minions down, as they see them as a threat.  So perhaps, a little bit of intelligent management might improve matters.  I don’t know!  But I have worked with people at the highest level in a clearing bank and know that there is a lot of nonsense there.  I suspect there still is!

Now let’s suppose that to get round the bonuses, RBS got some other company to manage their investments.  I don’t know whether this is possible, but I suspect that it would probably cost them an arm and a leg to make the same six billion pounds.  Probably one and a half billions of arms and legs.  And most of that would probably never see a British tax authority again, so we, the tax payers, would lose.

So it’s difficult!

What we actually need is a change of culture.

Banks, no matter what we think, are a short-term business.  For instance, a main board director of a major clearing bank, once told me that a third of their profits came from overnight money and the interest on money that had not been cleared.  That’s why banks don’t transfer money instantly!

So how can we make things better?

Economists have talked of a transaction tax on banks, to move them away from short-term thinking, but that would only move the business to somewhere that doesn’t charge.  So as with anything we need global standards and a level playing field.

So it will be a difficult and long uphill struggle to make the banks appear ethical in everybody’s eyes.

For my personal banking, I don’t use a bank, but a building society through the Internet and Zopa, the peer-to-peer lender. The former transfers my money efficiently and manages my credit cards.  And the latter pays me around five percent on savings, with the ability to withdraw the money gradually if I need it.  To get the same rate with a bank, I’d have to lock the money in for ever.

This is a model that many others will follow, leaving the global fruit machine to the so-called professionals.  Unfortunately, banks will probably do their utmost to strangle innovative competitors like Zopa.

So we must educate everybody in the Internet and personal finance, so that they can make reasonable decisions for themselves.  Many web sites do this very successfully.

But to return to the original dilemma.

Should the government limit bonuses for banks in which we have the major shareholding?

In my view they should not!

Why?

It will heap more bad publicity on the banks and hopefully push most of us to look for better and more ethical ways of handling our money.

In negotiations, whether we realize it or not, our cooperation increases the size of the pie for everyone (creates value) and our defection defines our slice of it (claims value).

We often develop imaginative ways to create value through the promise of mutual gains and introduce these ‘carrots’ into our negotiation strategy at the appropriate point as to maximize their impact and benefit.  As it relates to cooperation and the use of carrots, most of us consider ourselves fairly effective with this approach. 

What happens when the other party isn’t cooperating, however?  Are we as effective at bringing them back to the bargaining table?   Are we as capable of putting the deal back on the tracks?

Quite simply, what happens when they say no when we really want them to say yes?  How do we move them to our way of thinking?  That is the art of negotiation.  The art of letting *them* have *your* way.

Former Secretary of State James Baker once famously said (and I’m paraphrasing here), Diplomacy is the art of saying nice doggie long enough until you can find a big rock with which to smash it in the head.  If there is no rock, negotiation is pointless…  How many of us negotiate without a rock?  I can’t tell you the number of times I’ve had a client say we’re just going to tell our supplier we want to buy their stuff, but we need a better price.  I nod politely and ask, “or what”?  Puzzled, they ask, what do you mean “or what”?  I explain, and what if they say no?  What if they say this is the best possible discount they are able to offer you?  What will you do then? 

You see, the “or what” is the rub.  Gee Mr. Supplier, we’d like you to give us a better discount.  If you’re not prepared to answer the “or what”, you are just Oliver Twist asking for more.  Seemingly, we are much less prepared to correct behaviors that are counter-productive to our goals and objectives.  The use of ‘sticks’ in a negotiation is every bit as important as carrots, and in many cases, much more so.  When one party cooperates and the other party defects, the defecting party claims value.  When both parties defect, not only is no value created, no value is claimed either.  It stands to reason then, that you can prevent the defecting party from claiming value by defecting.  Sometimes the best way, perhaps the only way to bring a defecting party back to the bargaining table is to defect yourself.

Easier said than done?  Defection in a negotiation is often viewed with a negative connotation, and is also often confused with the end objective.  Some view it as confrontational or even as threatening.  Regardless of how it’s viewed, a defection strategy is often justified.  Defecting from a negotiation can be extremely effective in situations where a supplier is reaching or over playing their hand.

In one case, NET(net) was working with a client who had two viable solutions for a business need, and the preferred supplier overplayed their preference status to the tune of a 40% premium price over the competition.  The client told the preferred supplier that the current price made it impossible for them to be selected, but the supplier refused to lower their price, believing that the client was bluffing.  Instead of haggling, the client sent a polite thanks but no thanks letter, and went into unilateral negotiations with the alternative supplier with the full intent to get a deal done.  The preferred supplier returned the next business day with a market leading price and improved terms and conditions.  This led us to coin the negotiation axiom, “sometimes the fastest way to a yes is to say no”.  This client didn’t bluff.  They had every intention to do the deal with the alternative supplier and the preferred supplier knew it.  It’s not gaming or brinkmanship; it’s defection.  To be effective, it has to be credible, it has to be timed right, and it has to be sequenced appropriately.  When it’s done right, it works.

While we are mostly inclined to be cooperative and we all work hard to find ways to increase the value and mutual gains for all parties involved in a negotiation, the use of sticks on a quid-pro-quo basis is an extremely effective way to control the bargaining table.  Defections from negotiations are sometimes the best and perhaps the only way to break the cycle of supplier lock-in and the incumbency effect of entitlement rights.  See future blog posts on these and other topics.

Muito bom ter amigos que contribuem para o nosso dia-a-dia ser mais interessante… eu não viveria sem os meus. Todos são especiais, mas tenho sorte de ter um amigo como o Roberto Sena, que agora está do outro lado do oceano, matando nossa turma de saudade.

Mesmo longe, graças a internet, ele ainda renova nossos laços com uma dica diferente, com o alerta de um evento novo, uma novidade… enfim, é o cara que te faz pensar para frente e além.

Na última conversa que tivemos, ele me passou o link do blog dele com um documentário. Pensei: “Putz! 60 min! Não dá tempo de assistir tudo agora, mas vou dar uma olhadinha…”  Tsi tsi tsi … além de assistir até o fim, a cada instante ficava mais e mais encantada.  Por isso gostaria de dividir com vocês. Para explicar do que se trata este documentário, nada melhor que as palavras de quem indicou:

[...] No meio de tanto conteúdo o documentário Us Now me rouba a atenção. O vídeo criado pela produtora inglesa Banyak aborda a colaboração em massa, generosidade, a influência da redes socias nos governos mundiais, e claro, cita muitos exemplos de projetos que sao sucesso, como o Zopa, banco em que todos são gerentes.

Em tempos em que a escassez de crédito tem sido um dos piores efeitos da crise financeira mundial o banco britânico traz uma idéia muito simples, porém funcional, ou seja, o dinheiro do investidor (pessoa que empresta) é dividido em diversos empréstimos de forma a reduzir o risco de inadimplência, o resto funciona como um empréstimo normal, nisso tudo o único intermediário é o site que gerencia a operação. Os juros cobrados para o empréstimo de mil euros, por exemplo, não passa de 4% no fim do período de um ano, taxa que é praticamente inexistente num banco tradicional, ainda mais no Brasil, onde as instituiçcoes financeiras cobram um absurdo. No entanto, segundo a legislaçao brasileira o banco inglês não pode operar em solo brasileiro, por ser considerado uma transação semelhante à agiotagem.

Outro caso abordado no documentário é o Ebbsfleet United, clube de futebol comandado pelos próprios fãs, fundado em 1946 e que hoje está na 5ª divisão. Ficou mundialmente conhecido quando foi noticiado que, estando à beira da falência, diante da situação, acabou abrindo seu capital para todos, através da rede, possibilitando que os próprios torcedores adquirissem ações pelo preço unitário de 35 libras esterlinas. Enfim, o documentário foca nos projetos e propõe questões e sugestões, ao invés de ficarmos apenas submetidos a redes sociais tradicionais, como Flickr, Facebook, etc.

Divirtam-se! Bjoka de UpaLupa

Em tempos onde a mídia social se torna uma das ferramentas centrais (se não a mais importante) na captação de clientes, muitos cursos, palestras, publicações e documentários, entre outros meios de divulgação, têm sido produzidos, e encontrados com muita facilidade na rede.

No meio de tanto conteúdo o documentário Us Now me rouba a atenção. O vídeo criado pela produtora inglesa Banyak aborda a colaboração em massa, generosidade, a influencia da redes socias nos governos mundiais, e claro, cita muitos exemplos de projetos que sao sucesso, como o Zopa, banco em que todos são gerentes.

Em tempos em que a escassez de crédito tem sido um dos piores efeitos da crise financeira mundial o banco britânico traz uma idéia muito simples, porém funcional, ou seja, o dinheiro do investidor (pessoa que empresta) é dividido em diversos empréstimos de forma a reduzir o risco de inadimplência, o resto funciona como um empréstimo normal, nisso tudo o único intermediário é o site que gerencia a operação. Os juros cobrados para o empréstimo de mil euros, por exemplo, nao passa de 4% no fim do período de um ano, taxa que é praticamente inexistente num banco tradicional, ainda mais no Brasil, onde as instituiçcoes financeiras cobram um absurdo. No entanto, segundo a legislaçao brasileira o banco inglês nao pode operar em solo brasileiro, por ser considerado uma trasaçao semelhante à agiotagem.

Outro caso abordado no documentário é o Ebbsfleet United, clube de futebol comandado pelos próprios fãs, fundado em 1946 e que hoje está na 5ª divisão. Ficou mundialmente conhecido quando foi noticiado que, estando à beira da falência, diante da situaçao acabou abrindo seu capital para todos, através da rede, posibilitando que os próprios torcedores adquirissem uma açoes pelo preço unitário de 35 libras esterlinas. Enfim, o documentário foca nos projetos e propõe questões e sugestões, ao invés de ficarmos apenas submetidos a redes sociais tradicionais, como Flickr, Facebook, etc.

Assista ao documentário:

Leia mais sobre o Zopa

As you know I’m a great fan of Zopa.  I started with a post called Peer-to-Peer Lending – Zopa in July and have posted several since.  Just click the “Zopa” tag.

Have the banks found a way to stop this upstart competitor?  This has just been posted on the Zopa web site.

What’s happened to debit cards?

You may know that in order for a business to receive debit card payments, a merchant services licence is required. When we started out, our business model was unique and something of an unknown; as such, RBS Worldpay (the body associated with our banking partner that grants the ability to receive debit card payments) declined our application for a merchant services licence. We felt that debit card funding would be a useful service to offer our lenders, and found an alternative solution with the support of a third party in the anticipation that it would be a short term arrangement.

Given Zopa’s growth – and thanks to all your fundings – this year we thought it an appropriate time to revisit the application for our own merchant licence, with a solid track record to prove both that our model is working and that debit card business is popular with very little risk of liability to the merchant services provider. Unfortunately, despite our best efforts RBS Worldpay refuse to accommodate Zopa’s model, and have openly shown no appetite to work with us in coming to an arrangement or indeed in understanding our business. Equally, our volumes are such that the short-term process is no longer sustainable so it’s become unavoidable for us to draw the debit card funding service to a close.

The transfer will now take two days as opposed to being virtually instantaneous.

Why is it that banks assume that they are special?  They are no different to any other company and should live within the same rules.  But they don’t!

Zopa is one of those terms from negotiation theory that you come across from time to time.

It means “Zone Of Possible Agreement” – basically, it’s the area between the lowest offer they’ll accept, and the highest price you’re prepared to pay. As a property investor, you end up making lots of offers, and hope that some of them end up in the ZOPA (though most don’t.)

For the last six months or so, however, I’ve been investing with a company called zopa.com They have nothing to do with property negotiation, but use the term in a different area.

They are basically a forum where you can either register as a borrower (for loans up to a few thousand quid.) However, rather than lending their own money they match you up with lots of small lenders.

• As a borrower, you give some information about yourself, and basically say what interest you’re prepared to pay.

• As a lender, you transfer them some money, and basically say what interest rate you’re prepared to lend that money out at.

It’s a bit more complex than that – based on a borrower’s loan application, zopa allocate them into a risk group, and as a lender you can choose which risk group, or groups, you’re prepared to lend to, and set different interest rates for each. Zopa sort things out so that, rather than lending the whole amount to a single borrower, they break it up into small chunks, so you end up lending a tenner each to lots of borrowers (there are ways that you might lend more to one borrower, but the default is a tenner a pop.)

A little while ago, I thought I’d try my toe in the water, and just transferred in £250 to see how it worked. Since then, I’ve been earning 8-10% on the loans that have paid… which has been all of them!

I was expecting a few defaults -but  so far I’ve made 30 loans, each of a tenner (as the interest has come in, and capital’s been partially repaid, I’ve set up my account so Zopa will re-lend it automatically.)… and none have defaulted. Clearly, if you become a lender, you might get different results, but to my mind limiting my exposure to only £10 per loan, rather than making a single bigger loan fits my investment goals better.

Oh, and I chose mainly to lend to the youth market…. so it’s win/win. I get to lend to people who pay a better rate than I could earn with other short-term sources, young people get to borrow at a lower rate than a bank would charge them, zopa.com get their fees… and the only “losers” are, I guess, the banks who otherwise might have sold a loan at 15-20% interest… I can live with them lending.

If you’re interested, as either a borrower or a lender, then zopa.com

I’ll be updating my own experiences with them 3-4 times a year, but so far, it’s been excellent.

DECLARATION OF INTEREST: They run a “recommend a friend” scheme, so that if you take out a loan, or invest a reasonable sum, I will get a commission. This does not affect the interest rate you pay as a borrower, or that you receive as a lender.

I plot all of my Zopa investments in Excel.  This gives me a good hold on how they are performing.

But about a week or so ago, the date axis on the chart disappeared.  Strange because on my other computer the chart still works in the same way.

No matter what I do, I can’t seem to get them back. I get no message to say what is wrong either.

I hope I don’t write software like that!

I’ve done a bit of investigation and I’ve found that on the machine where the chart works, the version is Excel 2007 SP1 (12.0.6331.5000) and on the other machine that doesn’t it is Excel 2007 SP2 (12.0.6504.5001).  I’ve since found that Windows updated my Office and probably Excel on the 27th of October.

‘People rarely succeed unless they have fun in what they are doing.’ -Dale Carnegie

One of the main tools I’ve been using to grow it and use to gather information for the site is Twitter. By now everybody who doesn’t live under the sea or a rock knows what Twitter is… It’s a social networking powerhouse. I have added several lenders and contacts within the P2P lending community who have been helpful and very supportive of my personal effort to grow this site and portfolio into something serious. I personally believe Twitter should be used by EVERYONE who touches any facet of P2P lending whether it be over at Kiva.org or Microplace.com with your loans to people in Uganda, Zopa UK with your loans overseas or here at home with LendingClub.com or Prosper.com lending efforts. The collaboration potential is incredible. Think about it… A lender shares a story about their portfolio strategy or why they loan to a particular country or what their goal is for their money. It’s not only inspiring, but it can help others find confidence in their own actions, find a path to success and have a great time doing so with the help of others. I have a few ‘Twit’ peeps I correspond with on Twitter and it’s good to hear their stories about why they do peer lending or why they chose a particular loan or why they like one service over another. It’s all fascinating and it’s real-time. Say @loganrobinson tweets that he has found that ‘B’ grade notes over at LendingClub.com are showing more demand than any other grade of note. I could use that information to my advantage when looking for notes on the secondary market and know that those selling ‘B’ grades are going to have to mark them down to compete for a sale. Or say someone tweets that new loans are posted over at Kiva.org for people in need in Afghanistan and you’ve been itching to grab one. You’ll know right away and use that information to achieve what is purposeful to me. Whether you posted that information or acted upon it the impact on someone else is incredible!

Twitter is still very young but I see massive potential for social lenders no matter which platform they use or strategy (profit vs. not-for-profit) they have going into it. Collaborating with each other is the key and there can be no doubt that investing a few seconds to tweet about something important to you can affect someone else somehow. Sharing blog posts, stories and ambitions can help someone else take the plunge and join a larger community of lenders who could benefit from your information even if it’s just an update on a late loan payment or that you’re on the prowl for a loan in a particular credit grade or country. Cross-platform discussions such as Kiva.org lenders getting involved with Prosper.com lenders to promote their site as an alternative to profits or diversified humanitarian plan could work or vice versa a Prosper.com lender telling a Kiva.org lender about the income potential at Prosper.com and how they could recycle the interest payments from loans there into Kiva.org loans thus accomplishing two goals at the same time.

If you have a Twitter account I recommend adding the following contacts (@) and keyword searches (#) that follow the industry very closely…

@ and #kiva

#kivafellows

@ and #lendingclub

@loganrobinson

#microfinance

@ and #microplace

#p2plending

#peer-lending

@premal

@ and #prosperloans

@robgarciasj

@thePeertoPick

@tiffanykfox

@wiseclerk

@ and #zopaUK

I’m sure more will pop up over time but for now those are the ones I’ve found. If you know of any other useful ones please comment and share as I have no doubt that this list is incomplete. I implore lenders to talk amongst yourself, share ideas and collaborate together about P2P lending and how it can either be enhanced, improved, expanded or used differently. Also share your insight into strategy, goals and opinions. You may be surprised at the people who share a like mind or may have a solution you haven’t even thought of (maybe you are that person who has an amazing idea). The possibilities are unlimited, well all of 140 characters worth anyhow! Remember…

‘Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen of them.’

- John Steinbeck

Don’t forget to follow me… @thelittlevc I want to hear from you, follow you and learn from and with you!

There has been an article on BBC Breakfast this morning talking about on-line gambling.

In a piece entitled Gambling, Zopa and On-Line Bots, I wrote.

A strange thing is that since I’ve been using Zopa, I have cut down my gambling on things like horse racing.

I think that using Zopa is a bit like on-line gambling with a bit of the same buzz, as you check the results of what has happened every day about 10:30 at night.  Or it certainly seems so to me.  But perhaps I’m more an information man, than a true gambler.

I can’t remember the last time I had a bet.  In fact since I started doing detailed accounts with my new software product, there is nothing in the column marked, Gambling.

So perhaps we all need the buzz of gambling, but we need to channel it into something less risky and perhaps even productive.

(watch more in READ MORE below)
 
Us Now is a British documentary which looks at and online networks and the self-governing structures which make them possible.  The premise is that that we can all be the government and top-down bureaucratic structures will be eventually replaced.  The potential of social networks, new technologies and the internet generally, the type of participation demonstrated in the examples used,  it is claimed could change the way way countries are governed.  The film uses several examples to argue the point: opensource software Linux OS,   CouchSurfing,  mums helping each other on Mumsnet, loans from people not banks at Zopa.  Slicethepie, a platform enabling music artists to get financing from fans, who can also earn money from reviewing and promoting.  The fans of EbbsFleet United who own, manage and pick the players of their football team.  Access to technology, I thought was neglected from the discusssion.  If the means of production was to change (in the ways suggested)  surely everyone would need to have access? What do you think? Leave a comment.

WATCH THE REST: PART4   PART5   PART6   PART7

I’ve been a fan of organisations such as Kiva and Zopa for a while now. Peer to peer loans make many-a-business-ideas and lives possible around the world and today I found out about an equivalent type of service for students in developing countries. Vittana is still in beta, but is already creating connections with many microfinance institutions in the developing countries to stimulate regional student loans.

I never fully agreed with the idea of free education, but I’ve always looked for systems that make it universally accessible whether through loans, scholarships or offering students part-time work. In principle, if you really want to go to university and you’re willing to work hard for it, nothing should stand in your way. If it’s complicated to get a loan in the EU, I can’t even imagine what it must be like in developing countries. Back in my student days, when I first moved to the UK, I was denied student loans in this country and the Polish banking system back home told me that since I’m not studying in Poland they didn’t want to have anything to do with me.

Education is  a key way of changing societies, governments and the economies of developing countries. Ironically, the countries that most need educated people often cannot support their own domestic intellectual potential. Provided they take off, organisations like Vittana might be the single non-governmental way to allow more students to have a university education in developing countries.

I posted a graph and explanation of this a few weeks ago.

So have things changed?

Zopa Returns - August 2009

There are various lines shown on the graph.

• Red shows the A* lending rate
• Blue (Earn1) shows the returns discounting for any bad debt, but including accounts in arrears.
• Orange (Earn2) shows the returns discounting for any bad debt and arrears.
• Dark Blue at the bottom, is the OBR or Official Bank Rate

Notes.

1. Earn2 is creeping back up towards Earn1.  I think this is because after initial hiccups accounts tend to settle down.  I also think that Zopa have tightened their lending conditions, which may mean they get less hiccups.
2. Earn1 seems to have a sawtooth pattern.  This is because, most contracts are from the 25th or one month to the 3rd of the next.  At least the monthly peak rate seems to be rising.
3. At present the Inland Revenue does not think that bad debts are allowable against tax.  Many disagree and my accountant has said that he believes they will be allowed.  After all do they want a big fight over £200?

I’m still happy.

I’ve now got over £30,000 invested in Zopa.

Nothing really untoward has been happening with my money and according to the latest figures, I’m earning a genuine five percent on my money.  By a genuine five percent, I mean one that includes all the charges and bad debts.  It also takes into account money that is in Zopa, but is not been lent out yet. 

Of the 650 or so people I have lent to, only three are in trouble, with one a genuine bad debt and the other two limping along still making payments.  That level is below the level forecast by the company and well below the levels experienced by the average finance company.

The graph below shows the rates at which money has been lent out on Zopa.

Zopa Rates to August 2009

Note that since mid-April rates have been rising, but over the last month or so, they have flattened off a bit and they may even have been falling slightly.

The graph below shows the amount of money requested.

Money Requested on Zopa - August 2009

Note how over the last six weeks, the amount of money requested by borrowers has dropped significantly.

Is this and the drop in interest rates linked to the banks being easier places to borrow money or does it reflect a typical lack of business because of the summer holidays?  You could argue that the peak in June/July was caused by people borrowing money for holidays or new transport to take them there!

So there could be some fluffy cumulus on the Zopa horizon.  We’ll see if business takes off in the autumn.

But a bigger thundery cloud has been seen courtesy of the Office of Fair Trading.

When I first got the letter saying that I must register because of Anti-Money Laundering Regulations, I thought it was a joke or at worst a try-on.  Basically, reading the letter it just seems to be a catch-all to raise more money for this beleaguered government. 

Why should I pay £115 a year, when my lending is controlled by Zopa and I only transfer money into them, by a straight transfer from my bank account?  It is a yearly charge and would cut my rate from five to 4.7 percent.

If every lender on Zopa had to pay this tax, then it would not be the place for lesser mortals to get a decent rate on their money.  But then Prudence and his ilk, have never liked private enterprise.  Unless of course it benefits themselves!

It could be argued that Zopa is also a competitor to the various State Banks, that Prudence has saddled us with.

But despite all these clouds I will still be putting a percentage of my spare money into Zopa in the future.

Il social lending è il prestito tra privati che si effettua con l’utilizzo di una piattafoma internet. La più famosa a livello mondiale è PROSPER  con più di un milione di utenti e con prestiti erogati per circa 200 milioni di Euro. I siti che offrono questo servizio crescono di anno in anno. In Italia i più conosciuti sono ZOPA e BOOBER . ZOPA sta attraversando un momento difficile a causa delle contestazioni mosse da Banca d’Italia a un prodotto lanciato dal sito: il Conto Prestatori ZOPA.

L’idea di fondo del social lending è molto semplice. Per prestare denaro occorre che si instauri un rapporto di fiducia tra chi effettua e chi riceve il prestito. Perchè questo avvenga occorre che il finanziatore e il finanziato ottengano informazioni sufficienti  l’uno sull’altro. La piattaforma internet serve per garantire che lo scambio di informazioni sia  rapido e senza l’ausilio di intermediari. A chi richiede un prestito viene, infatti, attribuito un rating che attesta il suo grado di affidabilità.

da nonsoloprestiti.com

Il successo  del social lending è, in parte, attribuibile alla crisi finanziaria che ha frenato l’erogazione di crediti da parte degli operatori istituzionali favorendo chi fornisce strumenti di finanziamento alternativi.

L’ultimo nato tra gli operatori del social lending italiano è PRESTIAMOCI. Il team di ideatori è di provenienza BANCA SELLA. Il sistema di rating adottato è quello di CRIF. Si tratta di una pecualiarità che differenzia PRESTIAMOCI dagli altri  operatori – ZOPA e BOOBER – iscritti all’ALBO DEGLI INTERMEDIARI FINANZIARI.

If you are interested, there is an excellent debate on P2P Lending going on over a few blogs now. The general theme is whether P2P Lending (otherwise known as Social Lending) will make a difference to Banks.

It began here with this post at Zopa.

The problem is that unlike so many other far healthier industries, the banks have no effective competition. Microsoft is kept in check by Apple and increasingly Google. Warner, EMI and Sony are battling it out with the digital download phenomena. Tesco has to watch out for Sainsburys, M&S and Waitrose. Even the BBC has to keep something of an eye on ITV and Channel 4.

Banks don’t have the self-righting mechanism of genuine competition. It’s become a cosy club where customers are simply the supplier of money for banks to punt in their casino operations, politely called ‘investment banking’

Then James ex of Lloyds kicked in at Bankervision.

If Zopa were to have a material effect on bank lending, and its competitive differentiation is price, it will not win. It does not have pockets deep enough to win a price war with a major bank, let along the whole market. This much is simple market forces at play. The only reason this isn’t happening now is that, as Martin says, Zopa is not having a material effect on the market at present.

Then ‘always up for an argument’ Chris Skinner ratcheted up the volume here. [disclaimer - I am 100% with Chris on this one]

The real point is that, assuming there is a need for these new businesses which I believe there is, the only thing that undermines their business model is access to ongoing capital to get to the point of success. This is the challenge of any new business, and this is the real challenge to these new entrants: can they fund the business long enough to be successful?

Luckily there are plenty of financers out there who do believe in these new businesses however to fund them through their fledgling beginnings, including Red McCoombs for SmartyPig and Zopa’s investors range from Bessemer Venture Partners and Balderton Capital to the Rowland Family.

Even so, in Zopa’s case where they are creating a new market in P2P lending, the issue and challenge has always been getting enough people placing money into Zopa to enable them to meet the demands of those who want to borrow. Without funders, there is no marketplace.

So the challenge is to maintain investment and manage operating costs long enough during this start-up phase to get to the tipping point of growth. And, based upon a 40% increase in total loans just in the last year, maybe that tipping point has finally arrived.

And now the debate has made the FT blog …

But what we at Money Matters want to know is whether UK individuals who have used Zopa have got a good deal. At the start of the year, Matthew Vincent wrote a piece about a new online auction site for fixed-term deposits – and although he found that online lending exchanges such as Zopa were offering higher rates of interest, he suggested that these rates could come down as the number of lenders using Zopa increased.

… and the House of Commons through Tom Watson MP blog.

I wrote to the Chancellor in front of me but essentially I suggested three things:

1. Change the tax regime so that people who make loans – investors – can aggregate their total ‘wins’ and ‘losses’ for the purposes of tax. So, if you make 10 loans and nine of them fail, you should be allowed to offset them again the tenth loan that made you money.
2. Consider allowing people to use P2P within their ISA allowances.
3. Bring P2P within the remit of the small loans guarantee scheme. It is this area that I think could have a great impact in the small business sector. If people are prepared to bet their own cash on a business, then they are likely to conduct as much, if not more due diligence on the company as any bank. And when the banks make silly, greedy, short term risk averse decisions, groups of small private investors can step in.

Relevance to Bankwatch:
Thats a lot of debate for something that doesn’t matter.

[another disclaimer; I am involved with CommunityLend in Canada, a P2P Lending company]

Tom Watson talks up Zopa:

Out of all the digital start-ups I met as a minister, the one that most inspired was Zopa. Why? I think they have the capacity to completely re-write the terms of trade in the banking sector. I won’t go into my reasons in detail except to say that they can inject trust back into a financial system that is deeply lacking in that most important commodity right now.

Zopa is a peer-to-peer lending company that matches up people wanting to borrow money with people wanting to lend money. In doing so it bypasses the traditional middlemen for this function, banks.

Watson proposes some reforms that would help initiatives like Zopa:

1. Change the tax regime so that people who make loans – investors – can aggregate their total ‘wins’ and ‘losses’ for the purposes of tax. So, if you make 10 loans and nine of them fail, you should be allowed to offset them again the tenth loan that made you money.
2. Consider allowing people to use P2P within their ISA allowances.
3. Bring P2P within the remit of the small loans guarantee scheme. It is this area that I think could have a great impact in the small business sector. If people are prepared to bet their own cash on a business, then they are likely to conduct as much, if not more due diligence on the company as any bank. And when the banks make silly, greedy, short term risk averse decisions, groups of small private investors can step in.

While we’re at it, it would be useful to reform banking law to make it easy for people to start up a small internet-only bank that concentrates on the function of movimng money around between accounts. Such a slimmed down bank would have very little overheads and would therefore be able to charge much less per transaction. If I buy something on the Internet, a middleman such as Visa or PayPal grabs a cut of 1%-5%; all they are doing is moving numbers around on a computer, so this function ought to be doable at much less cost, maybe 1p per transaction. Of course, such a bank would have no room for highly paid incompetents such as Sir Fred Goodwin, which is probably why the people running traditional banks aren’t keen on the idea.

Il 13 luglio ricevevo una mail con questo oggetto:

“Comunicazione Importante di Zopa Italia s.p.a.”

Caro xxxx,

in data 10 luglio 2009 è stato notificato a Zopa il decreto del Ministero dell’Economia e delle Finanze che, su indicazione di Banca d’Italia, ha cancellato dall’elenco degli intermediari finanziari ex art. 106 la nostra società. Come conseguenza immediata ci vediamo costretti a sospendere la trattazione di nuovi prestiti e l’ingresso di nuovi Prestatori. La società sta valutando tutte le iniziative, anche di natura giurisdizionale, per tutelare la propria posizione e la community.

A tutela tua e di tutti i Prestatori, rimane pienamente attiva la gestione dei prestiti in essere, sia per l’incasso delle rate sia per il recupero credito. Il denaro in prestito diventerà gradualmente disponibile al rientro delle rate mensili.

Puoi già ora accedere a MyZopa per controllare il tuo portafoglio e ritirare il denaro non in prestito. Abbiamo disattivato tutte le offerte e annullato i prestiti in assegnazione rendendo disponibili i fondi.

Tutti i tradizionali canali di Zopa restano aperti per assisterti. Puoi trovare maggiori informazioni in Cosa succede ora?, nelle FAQ specifiche e nel blog.

Ti terremo informato su tutte le attività che metteremo in atto per salvaguardare un’iniziativa innovativa, etica, sociale e vantaggiosa per tutti i partecipanti.

Maurizio Sella Amministratore Delegato Zopa Italia S.p.A.

____

Come sempre nel nostro paese un esempio di sviluppo moderno attraverso la rete, viene subito chiuso. Siamo in una democrazia dei cittadini o delle banche?!

Ecco chi era Zopa: clicca per il video.

In their July Newsletter, Zopa has said this.

In the last week, we also recruited our 300,000th member – meaning that we’re now officially bigger than Belfast!

That’s a lot of members.  It would be interesting to know how many have actually lent or borrowed.

But that figure does illustrate how many people now know about the concept.

After a morning introducing the students to HTML, the afternoon session in week 1 gave the students a chance to step away from the computer screens and have a general discussion around the uses of social networks.

As a way of sparking dicussion we showed a film called Us Now, a film project about the power of mass collaboration and the internet.

The film featured the following examples of Internet-based group collaboration/organisation:

• Mumsnet
• Couch Surfing
• Directionless
• Ebbsfleet United
• mySociety
• Zopa
• Wikipedia
• Linux

The film isn’t a perfect teaching tool – it’s overlong in places, in some cases some better examples could have been used and not everything chimes with the realities of Internet access in the developing world.

However, the general themes raised are good, in particular the possibility of using the internet to enable mass collaboration.

Many themes came out in the discussions, with the different classes of school students, teachers and community organisations all bringing a different perspective. Topics included:

• the pros and cons of crowdsourcing
• privacy issues
• the lack of ubiquitous access to the Internet (especially vulnerable people in developing countries)
• spam, malware and viruses
• the reliability and accurracy of Wikipedia as an educational tool
• organisations following their audiences by establishing a presence on social networks

Tal y como avancé en nuestro microblog wisibility, voy a tratar de profundizar sobre una de las nuevas tendencias financieras on-line que más interés están despertando, los ya famosos préstamos P2P.

Prestamos P2P = web 2.0 + prestamistas independientes

La figura del prestamista particular siempre ha existido, estoy convencido de que en la Turquía del siglo VII a.c. ya se prestaban algunas de las primeras monedas entre familiares, amigos, etc…
Todos hemos visto esos anuncios en las secciones de anuncios clasificados donde se ofrecen préstamos con intereses bajos y sin facilitar ninguna información sobre la procedencia de dichos fondos.

Es evidente que esta actividad debía evolucionar, la desconfianza o falta de garantías (mayor entre desconocidos pero también existente entre familiares), tanto por el lado del prestamista en relación al riesgo que entraña una operación de estas características (sin CIRBE, RAI, ASNEF, EXPERIAN….), como por el lado del prestatario de no saber exactamente de donde sale ese capital, porque lo ofrece a este precio y que pasaría si no se llegase a devolver (si, todos hemos visto películas de la mafia),hacían que este tipo de actividad se limitase a algo marginal solo planteable en casos extremos.

Se necesitaba un marco que garantizase una cierta fiabilidad y, sobretodo, que hiciese evidentes los beneficios que puede llegar a ofrecer este tipo de préstamos frente a las propuestas bancarias estándares.
Que mejor lugar que internet, el lugar donde todo parece cierto hasta que se demuestre lo contrario y donde la gente se lanza a probar cosa nuevas si están presentadas de forma convincente y evidencian sus potenciales beneficios.

Así nacieron los préstamos P2P, surgió Zopa en UK, la empresa pionera en este sector (Febrero de 2005), y con ella, poco a poco, este mercado ha ido creciendo, en EEUU operan ya con una alta actividad empresas como Prosper y Lending Club, y así hasta más de treinta compañías que han encontrado un nuevo foco de negocio.

Estas comunidades tienen actividades muy diversas, hay dos claras distinciones, las comunidades que focalizan su actividad en los prestamos entre personas que ya se conocen entre sí (familia y amigos) y  las que se centran en gente que no se conoce con necesidades de financiación. Dentro de estos dos grupos diferenciados existen muchos tipos de préstamos distintos, los préstamos para estudios, hogar, auto, los micro créditos para el desarrollo, etc…
El modelo de negocio en todos los casos es similar, gente que dispone de capital (y en estos tiempos no encuentra una inversión fiable), gente que necesita capital, interaccionan, estipulan plazos y precio (tipo de interés a aplicar) y consuman la operación, en algunos casos se formalizan en tan solo unos días.

De nuevo los números dan la razón a la innovación, como muestra representativa, Prosper (EEUU) en poco menos de un año y medio de actividad ha logrado 510.000 usuarios registrados y ha alcanzado un volumen de préstamos de más de 100 millones de dólares.
Los estudios financieros realizados sobre este negocio son también claros indicadores de su crecimiento;

Estimando su volumen de negocio en 2010 por encima de los 5.800 millones de Dólares.

Prestamos P2P en España (versiones Beta):

La primera comunidad de este estilo nacida en el territorio español es Comunitae, fundada por Arturo Cervera y José Miguel Rotaeche, cuenta con importantes acuerdos con ASNEF y Experian para poder garantizar un estudio de riesgo veraz y con unos costes relativamente asequibles, comisión de apertura de 1′5% (mínimo 60€) y comisión administración de 1% anual.
Los resultados que están obteniendo en su corta trayectoria son evidentes:

Recientemente también ha aparecido Lubbus, de momento cuenta con unos 300 usuarios y las garantías de riesgo parecen a día de hoy más limitadas.

Es obvio que España es un mercado potencial para esta actividad, nuestra cultura de préstamos personales fuera del banco es muy amplia pero, sin duda, el principal escollo en todo este tipo de gestiones es el ferviente aumento de la morosidad, si bien Zupa ha registrado una tasas de morosidad bajísima (0.1% desde 2005) en España este tema digamos que es un poco especial y, supongo, frena a los inversores en cuanto a incentivar este tipo de propuestas. Como bien dice Fernando Alfaro (director general de Bankinter) la implantación del DNI digital supondrá un salto de calidad en este tipo de propuestas: “Para que el P2P Lending funcione, hay que saber a ciencia cierta que quien está al otro lado es realmente quien dice ser, hay que autentificar la identidad de los inversores y prestatarios, y el DNI digital permitirá ese proceso sin problemas”, en este punto es cuando puede llegar a suponer una amenaza real a las entidades de crédito ya que por el momento su volumen de negocio no supone ni el 1% de los préstamos concedidos pero, según los indicios y la evolución de la interactuación social en la red, es planteable la hipótesis de que en unos cuantos años los diferenciales y tipos de referencia los fijen los particulares.

In data 10 luglio ci è stato notificato il decreto del Ministero dell’Economia e delle Finanze, che su indicazione di Banca d’Italia, ha bloccato le attività di Zopa cancellandola dall’albo degli intermediari finanziari. Vi raccontiamo come è andata e cosa sta succedendo.

Cosa è successo?”

A seguito di una ispezione di Banca d’Italia a Zopa nell’autunno 2008, ci è stato comunicato a febbraio 2009 l’avvio di una procedura di cancellazione per aver fatto raccolta del risparmio (e non semplice intermediazione di pagamenti), a causa della giacenza temporanea sul Conto Prestatori Zopa del denaro in attesa di uscire in prestito. La sua natura di conto terzi era esplicitata nel Mandato a Servizi di Pagamento sottoscritto dai Prestatori ed è stata ulteriormente ribadita nella Informativa 16.02.2009.

Nelle sue controdeduzioni a marzo 2009 Zopa ha difeso con decisione la legalità del suo operato, ma si è detta disposta a diverse tipologie di contromisure operative per risolvere il problema sollevato da Banca d’Italia. Tra di esse l’apertura di conti di moneta elettronica, intestati ai singoli Prestatori, soluzione che abbiamo dichiarato realizzabile con la massima sollecitudine e per la quale avevamo trovato l’accordo tecnico-commerciale con due possibili partner. Dal decreto di cancellazione traspare che questa soluzione fosse soddisfacente ma non si ritenesse Zopa in grado di realizzarla (sic!).

Puoi consultare per approfondimenti il blog nei due post Lettera aperta agli Zopiani e Il decreto di cancellazione (e relativi commenti) e il comunicato stampa (.pdf).

Abbiamo immediatamente sospeso le attività di erogazione di nuovi prestiti, l’ingresso di nuovi Prestatori e il trasferimento di nuovi fondi dai Prestatori attivi, mantenendo invece l’attività corrente di gestione dei flussi di pagamento da Richiedenti a Prestatori e il recupero credito (più dettagli in Cosa succede ora?). I Prestatori attivi (3.590) sono stati invitati a ritirare il denaro dal Conto Prestatori Zopa, al 24/7 sono stati restituiti in seguito alle richieste pervenute 803.118€ su 1.120.000€ che erano a disposizione per prestiti.

I media hanno dato ampio risalto all’evento (consulta Dicono di noi) e, pur con il rispetto dovuto a Banca d’Italia, emerge l’importanza e il valore sociale apportato da Zopa e il pericolo di affossare per sempre il social lending in Italia.

L’orologio di Zopa si è fermato a 7.156.340€ erogati, 1.289 prestiti (1.137 ancora in corso), 42.290 iscritti alla community. È nostro compito comune farlo ripartire al più presto.

La Parola agli zopiani”

È stato già depositato il ricorso al TAR del Lazio. Nel contempo continuiamo a manifestare la nostra disponibilità a realizzare in tempi rapidi la soluzione operativa soddisfacente per Banca d’Italia: riteniamo che sia un interesse comune salvaguardare, oltre che i nostri Prestatori e Richiedenti, il futuro del social lending in Italia. Ti terremo aggiornato sugli sviluppi.

Da parte tua, è cruciale il sostegno che darai alle idee e alle pratiche di Zopa. Il caldo sostegno della community a Zopa ha dato sui media e sul web una chiave di lettura diversa a questo evento. Insieme dobbiamo continuare a difendere il nostro diritto naturale al credito tra persone.

by BBC Radio 4<, July 23 2009

A Bank without toxic loans and government bailouts looks like an intersting option in this 28 minutes-long interview by Peter Day (read his comment) to experts like Andrew Hilton (Director, Centre of the Study of Financial Innovation); Muhammad Yunus (Founder, Grameen Bank); Brandon Davies (Chief Executive Office, dRisk.biz Limited); Lindsay Mackie (Consultant, New Economics Foundation); Antony Elliott (Fair Banking Charity); Ian Hatton (Senior Regeneration Manager, Essex County Council) and Giles Andrews (Managing Director, Zopa) on BBC Radio4.

To listen please click here.

Airs again on Sunday 26 Jul 2009 at 21:30 @ BBC Radio 4

A strange thing is that since I’ve been using Zopa, I have cut down my gambling on things like horse racing.

I think that using Zopa is a bit like on-line gambling with a bit of the same buzz, as you check the results of what has happened every day about 10:30 at night.  Or it certainly seems so to me.  But perhaps I’m more an information man, than a true gambler.

Whilst we’re looking at gambling, there is an interesting site, which talks about on-line bots, that do automatic processing on gambling, foreign exchange and other sites.

Not for me! 

Computers are great slaves, but bad masters.