20080329 Social Lending@Bar Camp Bank Sf


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Social lending: is it really new? Is it going to be big?

Published in: Economy & Finance, Business

20080329 Social Lending@Bar Camp Bank Sf

  1. 1. Social lending: is it really new? Is it going to be big? Jean-Christophe Capelli March 29, 2008
  2. 2. Social media is changing the financial industry <ul><li>Social media is here to last </li></ul>fy 2007 rev : 550 M$ 115 M visitors/month <ul><li>Social media: for everybody, for any purpose </li></ul><ul><li>Social media impact for the financial industry </li></ul><ul><ul><li>New ways of propagation information (blogs, Wesabe or Mint websites) -> new marketing required </li></ul></ul><ul><ul><li>New business models: social lending, social money, P2PVenture,… </li></ul></ul>2007 rev : 150 M$ 50 M visitors/month
  3. 3. P2PLending is the oldest form of credit <ul><li>ROSCA (Rotating Savings and Credit Association) </li></ul><ul><ul><li>Ekub (Ethiopia), Lun-Hui (China), Consorcio (Brazil), Tontine (France),… </li></ul></ul><ul><li>Cooperative banking </li></ul><ul><ul><li>Caisse d’Epargne (France): founded 1818 </li></ul></ul><ul><ul><li>Caisse Desjardins (Canada): founded 1900 </li></ul></ul><ul><li>Credit Unions </li></ul><ul><li>Microcredit </li></ul><ul><ul><li>Grameen bank: founded 1976-1883 </li></ul></ul><ul><ul><li>Kiva: founded Feb-Oct 2005 </li></ul></ul>
  4. 4. P2PLending: cut out the middleman How to mitigate risk? Bank takes risk Bank Bank Borrower Lender Personal relationship Friends & family loan Business Model Lender Online P2PLending Source > Deutsche Bank Research August 2006 Peer pressure and/or diversification + social media features(optional) Borrower Lender Borrower Borrower Borrower
  5. 5. From P2PLending to social lending <ul><li>No marketplace, no social media features </li></ul><ul><ul><ul><li>Loans between family and friends </li></ul></ul></ul><ul><ul><ul><li>Valuable services helping folks &quot;formalize&quot; what are sometimes very informal loan agreements </li></ul></ul></ul><ul><ul><ul><ul><li>CircleLending (now Virgin Money ). Founded 2002 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>LoanBack </li></ul></ul></ul></ul><ul><li>A marketplace with no social media features </li></ul><ul><ul><ul><li>Zopa GB (March 2005) </li></ul></ul></ul><ul><li>A marketplace WITH social media features </li></ul><ul><ul><ul><li>Prosper US (Feb 2006) </li></ul></ul></ul><ul><ul><ul><li>Zopa US </li></ul></ul></ul>
  6. 6. Social lending timeline Already a global industry Some local barriers to entry (regulation, positive credit scoring)
  7. 7. Current figures <ul><li>Loans originated by: </li></ul><ul><ul><li>Prosper: 120 millions USD (within 2 years) </li></ul></ul><ul><ul><ul><li>All Prosper stats are public </li></ul></ul></ul><ul><ul><ul><ul><li>http://www.prosper.com/lend/performance.aspx </li></ul></ul></ul></ul><ul><ul><li>Zopa GB: 40 millions USD (within 3 years) </li></ul></ul><ul><ul><ul><li>Zopa GB data were not disclosed until last month </li></ul></ul></ul><ul><li>How to compare? </li></ul><ul><ul><li>French loan market (mortgages excluded): 75 billions euros originated each year… </li></ul></ul><ul><ul><li>Who’s got US figures? More than 5 times bigger? </li></ul></ul>
  8. 8. US Forecast (Celent Study) US P2P loans market : 2007 : 600 millions USD 2010 : 5,8 billions USD
  9. 9. Global forecast (Gartner study) <ul><li>Gartner predicts that “by 2010, social-banking platforms will have captured 10 per cent of the available worldwide market for retail lending and financial planning”. </li></ul>
  10. 10. Personal loans between family and friends who do work French launch: May 2008 Contact: Jean-Christophe Capelli, CEO Blog: http://capelli.typepad.fr +33 (0)6 14 73 23 46