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MORI Research On Bank Spreads

Posted by Martin at 12:07 pm

So how much is your bank charging you?

A simple enough question, but even the lady running Lloyd’s retail banking in the UK couldn’t tell the Treasury Select Committee how much she was being charged for her own Lloyds current account. It made uncomfortable yet compelling viewing, as a quick look at this footage will confirm (fast forward to 9:56:25) http://bit.ly/eOWxZp.

The Treasury Select Committee’s view is that unless you can tell what you are paying for your banking, how can there be any real price competition between banks? It’s a very good point.

Competition in the banking sector was one of the key issues that the Independent Commission on Banking (ICB), chaired by Lord Vickers, was asked to look at by the Government. Its final report was published earlier this week, but almost all of the noise afterwards was about whether or not banks in Britain should have their everyday retail operations “ring-fenced” from their so-called ‘casino’ banking where all the big and dangerous risks are taken. Vickers says yes, most banks say no.

The Government has come out in favour of Vickers’ recommendations and said it will pass new laws to put them into action, BUT after further consultation – and not before 2019. Not exactly next week, and with years for the banks’ lobbyists to try to dampen Mr Osborne’s apparent enthusiasm for change.

Zopa made its own contribution to these debates recently by commissioning the independent research company Ipsos MORI to find out how well the public understands or even just knows about ‘Bank Spreads’- the difference between what banks pay in interest on your savings, versus what they charge you to borrow. The typical bank currently inflicts a spread of 11%, paying around 1% on savings, but charging around 12% for a personal loan (source: Moneyfacts)

Here are Ipsos MORI’s findings:

1. 93% of consumers do not know what a Bank Spread is.
2. Of those that say they do know, less than half actually do.
3. When told that a typical Bank Spread is currently 11% (source: Moneyfacts, between savings account interest rates and rates charged for personal loans), a total of 58% of people think that is too high (38% think it is far too high).
4. 41% of people disagreed with the statement “Banks are commercial organisations which need to make money so I am comfortable with them doing so in this way”.
5. 80% of people agree that “Banks should state clearly what their current spread between their typical personal loan and typical savings rate is, for example in branches and online”.
6. 73% of people think “the Government and regulators should put rules in place that control the size of spread that a bank is allowed to apply.”

Giles Andrews (cofounder and CEO of Zopa) said “The difference in rates obtained by lenders and borrowers is, clearly, fundamental to the banking industry because that is where their profit lies. But this research reflects public concern that the traditional lending institutions are ripping their customers off and keeping their customers in the dark about the process and the extent of the rip off.”

“It does not have to be this way. We at Zopa have shown that peer to peer lending, conducted in a transparent manner, works better for everyone. Borrowers can get access to much lower rates, individual lenders can secure returns greatly in excess of savings accounts and Zopa can take its low charges, all within the spread, leaving everyone much better off than if they had gone to a bank. It is just rather tragic that more people don’t even know about bank spreads and the measure they provide of just how much the banks are taking from them and their fellow customers.”

I couldn’t agree more. What do you think?

Posted in Press | 4 Comments »

NEED:LESS… 1 day to go!

Posted by Thea at 9:41 am

Starting from this Friday (09.09.11) the Zopa team will be striving to need less in order to give more.  We’ve made a commitment to each live on a budget of £5 a day (or £35 for the whole week) and give all the money we save to the DEC East Africa appeal via our Just Giving page.

But we don’t want to do it on our own!  We’d love for you to join us and to help get you started here’s our consumption calculator to work out how much you could save and donate: NEEDLESS Calculator

Remember, we’re classing consumption as food, drink and entertainment, so you can ignore all your bills and travel costs.  You might have to limit those trips to the pub and make a packed lunch for a week, but by the end of the week we’re pretty sure you’ll be a far more savvy spender so you really can’t lose!

So who’s in?!  Watch this space and our Facebook page for updates and a challenge for the weekend!

Posted in General, Office, Team | No Comments »

Lending Offer Screen: Understanding the data

Posted by Marie at 12:23 pm

Creating a Lending Offer is one of the key actions a Lender at Zopa can take. To make the experience simpler for new Lenders and at the same time give enough information to more experienced Lenders, we have launched a new simplified Lending Offer screen today.

This blog post explains the changes we have made to the screens and above all, the data they present to our Lenders.

Zopa icon
The data that informs the Zopa icon has been changed slightly to be more representative of what’s actually going on in the markets. While previously, the Zopa looked at the last 5 matched applications and defined the lower and upper boundaries as the lowest and highest rates included in these loans (which meant the Zopa could fluctuate quite rapidly), the new Zopa boundaries are defined by the extremes of the last 7 days.

The upper boundary comes into force when the rate you’ve selected was not included in any of the loans approved in the market during the last week, while the lower boundary is defined by the rate that would’ve gotten you included in absolutely every loan approved in the past week in the respective market.

More information section
One of the key improvements in the new screen is the quality of data we provide that further informs how you set rates – in addition to the Zopa icon. Instead of the ‘Max rate’, ‘Min rate’, ‘Lending Speed’ and ‘Offered Lower’ columns, you can now see a ‘Lending Forecast’, ‘% Loans’ and ‘Minimum loan size’, based on the data of the last 7 days.

These columns are intended to show more experienced (or interested newbie!) Lenders what they could have lent and how many % of loans they would have been included in the past 7 days and at what loan size their money would currently be matched at using the selected rate. While we can’t issue 100% accurate predictions, the performance in the previous week should be a good indicator of the possible performance in the future.

Market data
You may have heard of our weekly market data spreadsheet in the weekly Lender email, you may have even downloaded it before. If you have, you might also know that it’s updated once a week on a Monday, and therefore not very useful on a Friday afternoon when you want to find out where you are in the Queue. On the upside, it’s in a spreadsheet format, so you can easily find yourself and do calculations that help inform your rate choices – if you want to get really stuck in.

At the same time, the previous lending screen had a little ‘Mkt’ link, which opened a window showing you the real-time Queue to a high degree of detail, but unfortunately not in a format that’s very easy to play with.

For the new screen, we’ve decided to take the best of both worlds and provide a downloadable spreadsheet providing up-to-date information on the current Queue of Offers in all markets. Additionally, we’ve anonymised the information (except for your username) for security reasons.

All that aside, we believe the new screens are a lot cleaner and easier to navigate, and should make it less daunting for new Lenders and more insightful for experienced Lenders to play with their Lending Offer.

Posted in Changes, Design, New stuff, Technology | 37 Comments »

We proudly present the P2P Finance Association

Posted by Marie at 11:30 am

We’re excited to tell you that this Monday, 15th August 2011, Zopa and two of our competitors – Funding Circle and RateSetter – set up a new UK trade body called the ‘P2P Finance Association’. We all thought this was a great idea to help ensure that high standards of cutomer protection are in place and policed in our rapidly growing sector, especially for the areas where there is still a gap in UK regulations.

As you may know, although individual borrowers are protected by Consumer Credit laws overseen by the OFT, there are currently no bespoke regulations in place to protect lenders and Zopa has been actively lobbying Government to put appropriate regulation in place. We have received supportive responses, but have been told that new regulation must wait for the new regulator replacing the FSA to be put in place. This is still some months or even years off.

It is with this in mind that we as key industry players decided to establish an official trade body to set meaningful standards that all members must adhere to. This body will help ensure that when regulations do eventually get put in place by the Government, they are sensible and appropriate for our innovative sector. Other peer-to-peer finance firms are free to apply for membership, but to join they must meet all of the Association’s Rules and Operating Principles as Zopa, RateSetter and Funding Circle all do.

Full details about the P2P Finance Association and its Rules and Operating Principles can be found at its website: www.p2pfinanceassociation.org.uk

Posted in Finance, General, Legalese, New stuff, P2P, web 2.0 | No Comments »

Most trusted, second year running!

Posted by Marie at 6:59 pm

Yesterday was a big night for the nation’s financial services industry – the Moneywise Customer Services Awards 2011 were staged at the glamorous Northumberland (photographic evidence on our Facebook page). Caroline and I joined the in-crowd and waited in anticipation for the announcement of the winner in the category ‘Most Trusted Personal Loans Provider’ where we featured proudly on the shortlist alongside First Direct, Nationwide, Tesco Bank, Sainsbury’s Bank and Natwest.

After a scrumptious dinner (of which photographic evidence is not available, due to bad lighting and rumbling, impatient stomachs), the happy news was announced to the tunes of Bob Marley’s Three Little Birds: Zopa is the UK’s Most Trusted Personal Loans Provider 2011, for the second year running!

(Phone cameras aren’t what they used to be…)

Last year, we were thrilled to take the crown and we are over the moon that we have once again been voted to the top spot by our lovely borrowers – thank you to everyone who gave us their vote, we look forward to another year of great service!

And just to put this into context: Over 12,000 British consumers participated in the survey and had their say on how their financial service providers performed – what a sample size!

For the full results, check Moneywise here:
http://www.moneywise.co.uk/customer-service-awards/results
For more pictures from the event, check our facebook page here:
http://www.facebook.com/ZopaUK

Posted in General | 3 Comments »

Join the Zopa team

Posted by Marie at 3:17 pm

We’re on the hunt for a superb business analyst and a webdesign powerhouse to join the Zopa team. The two job ads can be found here, and we’d love it if you applied sooner rather than later or shared the information with anyone you think might fit the bill.

Not only is this a great opportunity to join Zopa on a full-time basis and shape both the future of Zopa and your own experience, we also have a great selection of fresh biscuits every week, a bunch of fun and enthusiastic colleagues and a splendid location in the very centre of London!

We look forward to hearing from you!

Posted in Changes, jobs, Office, Team | 2 Comments »

Friday the 13th makes for great conversation

Posted by Marie at 12:19 pm

You might have heard it through the grapevine (or our newsletter): This Friday, 13th May, Zopa will hold a one-hour live chat. Whether you’re new to Zopa and just dipping your toe or a complete Zopaholic, we hope you’ll join us and be part of the first live chat in years.

From the Zopa team, Giles, Adam, Amanda, Marie and Beth will be representing, and if we don’t see at least 5 members join us to balance the numbers we will be very distraught!

Joining the chat is straighforward, but to be sure I’ll outline the process briefly here:
1) Go to Zopa Talk at 2pm on Friday (or any other time before 3pm).

2) Log in using either your Forum login (this is not your Zopa username and you’ll have to register separately), your Facebook login or your Twitter login.

3) Look for the tab that says ‘Chat’ (you won’t be able to see it right now as we haven’t set it live yet, but here’s a screenshot so you know what to expect):

Depending on your feedback, we hope to introduce this as a more regular feature but for now: see you on Friday!

PS: Apologies to all the Friggatriskaidekaphobics amongst you, we hope you might pop in anyway (a little known fact, the fear of Friday the 13th is called Friggatriskaidekaphobia).

Posted in Community News, General, Members, New stuff, web 2.0 | 2 Comments »

Banking reform?

Posted by Giles at 10:04 am

On the morning that the Vickers banking commission “Interim” report was released, I thought I would set out a few personal thoughts.

You won’t address the banks’ poor delivery and virtual monopoly of the lending and savings markets by creating more banks – whether you break them up or not – or fiddling at the edges with the rules. That just means we have more banks. When horse drawn carriages could not meet man’s transportation needs, we didn’t just breed more horses, we invented the motor car.

We don’t just need more of the of the same, dressed up in a different way. It’s time for the Government to stop thinking that banks are the only way to provide the essential financial tools required by the public and the economy. Through their corporate greed and lack of foresight, many banks became insolvent and had to be bailed out, despite their virtual monopoly and offering very poor products and services to the consumer.

Since the crisis, and despite the handouts, banks continue to systematically fleece the consumer, by inflicting some of the biggest spreads ever seen in an attempt to rebuild the balance sheets that they destroyed. It’s not impressive, and frankly the prospect of trying to address such poor performance by creating more banks is misguided.

Access to good value, competitive savings and borrowing products is essential for people to lead their lives successfully and for the economy to operate effectively. Allowing the same industry that brought the country to its economic knees to continue to have a monopoly on delivery of these vital social functions just makes no sense at all.

Obviously there are bits of the banking system, away from the casino banking of their investment arm, which are socially useful and ways to make these better must be found. The peer-to-peer mechanism, where the lenders and the borrowers decide the rate at which they do business, is such a way. The peer-to-peer mechanism keeps more money in borrowers’ pockets and gives lenders a better return at the same time – precisely because there is no bank involved in the transaction.

Over the last 6 years Zopa has proven that new competitors outside of the cosy cartel of banking can not only deliver ready access to superior value to the consumer, they can do a radically better job of supposedly core banking functions like managing credit. Peer-to-peer lending is a mechanism which helps enlightened lending companies give better value to consumers.

The Government should take decisive action to help new competitors with new models to apply real pressure on the banks to drastically raise their game, not just make it easier for more banks to join this cosy club where the consumer barely gets a look in.

Posted in Finance, Press | 10 Comments »

Happy Birthday (x2)!

Posted by Marie at 5:40 pm

After strengthening with pizza (photographic evidence to the right), the Zopa team headed for The Waterpoet in Shoreditch for our 6th birthday party. There, we were delighted to see plenty of lenders and borrowers joining us to celebrate our birthday, and where a natter was promised, we all delivered.
The superb tracks on our party playlist (such as Money For Nothing by Dire Straits (I wish!) and the obligatory Money Money Money by Abba) were all but drowned in the sound of lively conversation between our members and staff. If you want to relive the best moments, the playlist is still available on Spotify here!

Sadly, in the heat of the night, no pictures were taken. While some may say that is a good thing, if you do have some party snaps, we’d be very happy to see them over on our Facebook page!

At this point we would like to extend a big thank you to all our members who joined us – it was a pleasure meeting you all, and we hope to see you again next year! And for all those who couldn’t make it (and all those who could, in fact), here is a heart-warming story about one member whose reason-for-absence put a smile on our faces…

On the 4th March, we received this message:
“Thank you very much for the invite to your wonderful 6th birthday bash – unfortunately I shan’t be able to attend as this date shall not only mark your 6th birthday but also the date on which we are expectant our first born child.
As much as I am sure having a child born at your birthday bash would be superb for publicity I have a feeling my partner may not be so accepting of the idea however I shall mention it in passing!”

And guess what was in our inbox the morning after the birthday party?
“Just thought I should drop you a response to let you know that our gorgeous little girl was born yesterday evening – so best that we decided against coming to your 6th Birthday party.”

How lovely is that?! Congratulations from the Zopa team!

Posted in Borrowers, Community News, General, Lenders, Members, Team | 1 Comment »

Zopa’s first foray in TV advertising

Posted by Savaroony at 1:55 pm

Last month we were really rather chuffed to get our first ever TV commercial up and running on your tellyboxes and it’s been spreading the word about Zopa very nicely. However, several of you asked us why we hadn’t produced an advert that spent more time explaining why Zopa is different and indeed we wanted to do just that, running both commercials simultaneously to see which one worked best. You can see that second version of the commercial here, but sadly the TV regulator has not allowed us to run it in the big world of telly as it doesn’t clear all their hurdles. Booooo!

When we filmed the ad, we simply asked a few of our borrowers to describe Zopa, explain why it’s different and why they like it in their own words. The regulator has a tricky job making sure that a particular turn of phrase in an advert can’t be interpreted as denigratory and that all claims are substantiated and even though we picked the snippets that were most factual, we were still not able to get the thumbs up. For example, they didn’t like “loan company like no other” as they felt there are now other P2P lenders and wouldn’t accept our argument that they have different lending models. They also thought that some denigration of the banks accumulated through the ad to the point where it became overly critical, even if only by implication, so for now we’re running with our trusty first cut and are watching the impact it’s having very closely to see if we can prove that a second bite at the cherry will be worthwhile.
Stay tuned…

Posted in General | 4 Comments »

Guest Blog – Why Zopa is cool

Posted by Martin at 12:46 pm

We welcome our guest blogger and Zopa member Garrett.

Garrett has been a member of Zopa for a few years, His Twitter Bio says: Passionate about people, Dublin lad living in Glasgow play rugby for Clydebank and have my own business.

Why Zopa is so cool

When I moved to the UK I could not wait to start loaning money with Zopa, Coming from Ireland we did not have access to a system that allows you to take control of your finances in this way

If I have a good work day and win a new contract I can make a deposit and see this money grow and help others.

I love the youth loans section, I had people around when I was young to give me a hand and I can give back now by offering my best rates to the youth market.

I love the email I get every week, gives me a little boost to know my money is helping people and I can see it earn me a return.

I started my own business to offer outsourced sales to allow companies use my services to boost their sales when they need it, I feel Zopa allows me the same flexibility to do what I want to do with my money.

Just started on twitter @garramsay and spreading the Zopa word as fast as I can

Thank you, Garrett!

If you would like to be the next guest blogger, pop us an email: adam@zopa.com

Posted in blogs, Guest blogger, Members | 3 Comments »

Reloaded: Moneywise Customer Service Awards 2011

Posted by Marie at 5:20 pm

If you’re a regular reader of this blog, you’ll have seen our entry from June 2010 on winning not just one, but two Moneywise Customer Service Awards. That was all thanks to our lovely borrowers who took some time to fill out the Moneywise survey and told the world how much they liked their experience with us as their Personal Loan provider.

This year, Moneywise are once again looking for the nation’s most trusted finance providers in a range of product categories, giving you a chance to (I quote) “reward the companies you love, shame the ones you don’t.”  The product categories you can vote on include mortgages, credit cards, home insurance, savings accounts and personal loans.

This last category is probably the first where Zopa springs to mind, and if you’ve taken out a loan with us, we’d feel honoured if you chose to mention us in the survey.

Additionally, if you are not a borrower, but a lender who’s invested savings using Zopa and enjoyed the service we offer, we’d be delighted if you shared your thoughts on your Zopa lending account as a sort of savings account.

It only takes 10 minutes to complete the survey (according to Moneywise, longer if you get carried away…) and to offer an incentive aside from getting your voice heard, Moneywise is giving away 1 x £1,000 in cash and 5 x £50 in retail vouchers among all participants – so best of luck to those of you who vote!

For reference, here’s the link in its full splendour: http://www.moneywise.co.uk/customerserviceawards/2011

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Posted in awards, Borrowers, Finance, General, Lenders | No Comments »

Christmas Caption Competition

Posted by Savaroony at 1:44 pm

There was much wearing of silly hats and those odd shoes that no one likes at our recent Christmas shindig when we all went for a spot of bowling. We established that the drinking of wine has a distinctly variable effect on bowling skills, causing Beth to improve markedly while making others go distinctly downhill.

You can check out a few snaps from the evening here and more importantly, enter our caption competition for this photo. Just tell us what Giles might have said to cause that reaction from Adam and Christian and the best entry wins something nice! Get your entry in before 4th Jan 2011.

Posted in General | 16 Comments »

Larger than Liverpool

Posted by Martin at 1:15 pm

Over the past few years there have been a few great member landmarks here at Zopa, for example:

Back in October 2006 we were officially “bigger than Basildon” when we hit 100,000 members.

Two years later in July 2008 we became “bigger than Brighton” when our 200,000th member signed up.

Another two years later in May 2010 we hit a whopping 400,000 members making us bigger than Bristol, as well as Brunei, The Bahamas, Belize and Barbados.

Just over 6 months on and we’re now larger than Liverpool, Leeds and Luxembourg and more sizeable than Sheffield as we welcomed our half-a-millionth member!

We’ve had a bit of fun over on the forum where members nominated the date and time they thought our 500,000th member would sign up. It happened on 1st December at 3.26pm so congratulations go to sl75 who was just a couple of hours out with his nomination and wins some wine for his efforts!

Next stop, greater than Glasgow…

Posted in Community News, General | 4 Comments »

Instant access to your money with Rapid Return

Posted by Martin at 12:01 pm

Last week was an exciting week for everyone at Zopa as well as for our lenders, when we announced the launch of a new feature called ‘Rapid Return’.  It’ll allow lenders in most circumstances to access some or all of their money, before their borrowers are due to pay it all back, in return for a 1% charge.

Until now, lenders had no option to access their money lent out until it is repaid by borrowers through their monthly repayments. But with the launch of ‘Rapid Return’, lenders can now choose to get instant access to their money, for whatever reason they want.

This new option means that for huge numbers of people who by necessity have their money in instant access savings accounts, the radically better returns available from person-to-person lending become readily available. Given that the average return on an instant access savings account is currently 0.79% (source: Moneyfacts) and the average return Zopa lenders have enjoyed over the last 12 months is 8.1% (after charges but before any bad debt), this could make an enormous difference to the financial well-being of these people.

We’re pleased to see that it’s proving rather popular! Click here to find out more about how it works.

Posted in General, Lenders, New stuff | 1 Comment »