Internet Based Social Lending

摘要

Social lending is community-based lending. The “family and friends” loans community has been extended and formalized to create a marketplace of borrowers and lenders. In Internetbased Social Lending (IBSL), the company runs a website that connects potential lenders with potential borrowers. By removing the overheads and bulky infrastructure of the banking system, IBSL provides lenders a higher rate of return in exchange for only slightly higher risk. Borrowers here are those who are unsatisfied with the rates offered by banks or those that fall outside of the traditional banking systems due to unattractive credit ratings, high risk profiles or projectbased, sporadic compensation. Borrowers are also attracted by the possibility of getting lower interest rates. We believe that this has the potential to impact the genesis of many small and medium level enterprises, besides providing a perennial source of financial leverage. The focus of this paper is not just the underlying technology and innovation, but also the market it creates. We take the example of one of the key players in the field, Zopa, and study its organization.