What is the p2p economy?
This quote captures the essence of what we hope to offer Canadians at CommunityLend. Its nice that it came from the Harvard Business Review, and sorry we can’t provide the full article which is subscription only.
hbr.org
It is only a matter of time before these digital systems close the arbitrage enjoyed by large banks, which lend at up to 15% interest but pay only about 5% on capital. Why do business with a bank when your network’s lending and savings interest rates are both 7%.To grasp the power of such a system, imagine your local credit union with the membership and social networking capabilities of MySpace.
A simple concept worth reflecting on, for us, and for Banks. Whatever the interest rates are in Canada, the reality is that a large spread exists between loan rates, and deposit rates. The facts are clear, and, the costs that Banks’ must cover are real.
At its essence CommunityLend would like to offer a better way for everyone to share in that spread by providing a simple and efficient service.
We think its a powerful concept. What do you think?
This is a fantastic concept and it works well in Prosper.com and Zopa.
I can’t believe I’m the only Canadian who has been waiting with bated breath since last summer for CommunityLend to get going.
Note: I’m going to be on the lending side of this because Canadian banks offer very little for moderate to large amounts of cash in the way of interest. Watching Prosper.com, it is clear that careful selection of borrowers will bring 5 – 7% returns on cash investments (after fees and defaults). This better than GIC’s and other short-medium term cash investments.
Alan.
Alan Browne
May 2, 2008 at 7:14 pm