‘Guest blogger’ category

It’s not a Dreamcatcher, it’s a piece of String (3rd Guest blog)

Posted by philipg27 at 9:42 am

philipg27 is a lender at Zopa, sometime contributor to the Discussion Board and an habitual moaner about the design of the Zopa website. [His words, not mine! Dave] Recently I was listening to a comedy program on Radio 4. In one sketch there was a Professor who cynically dismissed a number of "new-Age" ideas. As part of the sketch the Professor referred to his book "It's not a Dreamcatcher it's a piece of String". Whilst the sketch itself was not a classic the title of the book stuck in my head. Why is this at all relevant for Zopa? Well my blog piece is a bit of comment about the nature of Zopa, and re-working the book title I thought this piece could be called "It's not a Community it's a Market". I've previously seen Zopa referred to as a community, in the same way that the micro-credit institutions in the developing world work at a community level. For me Zopa fails to pass the two tests I would have for a community. 1. The two parties (borrowers and lenders) know each other. 2. There are shared communal values that encourage the repayment of debt, and conversely would stigmatise any borrower who failed to complete repayment. I am a lender at Zopa and there is clearly no way, or mechanism, that requires me to know any of the borrowers at Zopa. Regarding the second test I'm not convinced that any borrower at Zopa feels more obligated to repay a P2P loan than any other "commercial" loan. I suspect that the main motivators for borrowers to repay loans are both honesty, and the need to maintain a good credit rating. As an aside I guess the most likely group of Zopa participants to be capable and willing to form a community would be the Lenders, but such as situation would probably result in raising of the rates at Zopa and accusations of operating as a cartel! The other "myth" I want to comment on is the reference to Zopa as the eBay of P2P finance. I don't agree with this. eBay is a brilliant example of natural, highly scalable, monopoly. The more people that use eBay the greater is the incentive for both sellers and buyers to use eBay. In addition as a company eBay requires relatively little addition investment to host the second million auctions than the first. Contrast this with Zopa. Zopa will never become the single source for individuals to lend and borrow money, if only for the reason that most people probably prefer the safely of collective lending, such as via a Building Society" where the problems (and risks) of an individual defaulting are hidden from the lender. A better analogy for Zopa would be the insurance market that Edward Lloyd set up in his coffee house. Here people met and did business, thus creating an insurance market. In fact this analogy is even better when you consider the actual mechanisms employed at Lloyds of London. As well as providing a "market'' for buyers and sellers to meet Zopa provides two additional functions that mirror the market at Lloyds (Or at least as I remember them from my time there in the late 1980s). Firstly Zopa itself provides the function of assessing the risk of each and every loan, in the same way that the Lead Underwriter at Lloyds would assess the policy being requested by the Insurance Broker. Secondly Zopa provides the matching mechanism to bundle a set of loan contracts by the Lenders into a single Loan for the Borrower, in the similar way that the insurance broker at Lloyds would go around the Syndicates at Lloyds until the policy was fully underwritten. As an aside Zopa demonstrates almost perfectly what an 'O' level Economics student is taught about markets, at least on the supply side. When the price goes up the amount of money available to borrow goes up. Zopa even publish copies of this information on a weekly basis. Having banged on about Zopa being a market I should finish by commenting on why this is important. Well most importantly for Zopa the message is that Zopa should be working towards making the market easy to use rather than attempting to foster a sense of community. The website is notoriously difficult to use, it should be as simple to use as my online-stockbroker, and provide me with enough information to make informed decisions on the most effective options to lend money. I don't really need need pictures of people jumping over mountains whilst baking bread I need cash flow statements, better reporting and maybe even some idea of what's happening to my loans being processed that are currently lost in the Zopa Triangle ...

Posted in Guest blogger, Members, P2P | 6 Comments »

A Zopa lender writes (Second guest blog!)

Posted by 1020990 at 10:54 am

"1020990" is a Zopa lender, and an active member of the Zopa discussion boards. No one knows what the numbers mean - a bit like Lost. :) So how did this all happen!? Last time I looked, which still seems to be a far too regular occurrence, I’d racked up over 100 posts about Zopa here having only been bitten by the bug a couple of months earlier. Maybe I should blame Cliff for ever having mentioned the idea over on the Motley Fool. Alternatively, it may just be true what they say about mad dogs and English men given the excess of summer sun in recent days - even though that doesn’t normally coincide with Wimbledon! Either way, at some unwittingly altruistic moment I promised the resident Zopa blogger (Zlogger entry anyone?) a few words on subjects that must apparently relate in some way to Zopa or P2P activities. After all, despite his appeal, I think there’s only been 1 guest blog post – so that makes this at least the second best of all time guest blogs at time of going to press! Given that my experience of P2P activities is limited to that of ZOPA the possibility of an earth shatteringly innovative article is somewhat unlikely! However, the question “What bits of Zopa make you go 'Doh'?” has been previously asked, so I’ve hopefully pulled together a few of the major sticking points that Zopa lenders are currently operating as judge, jury and executioner on, on the lenders discussion forum. As new website releases are still coming through, we’ll hopefully be able to have an influence; however slight; on the tweaks which happen. After all, “great things are not done by impulse, but by a series of small things brought together”. So with my IT knowledge limited to Excel macros and my biased position as a lender, I’m hoping the small things I picked up below are relatively minor rather than requiring fundamental redesign, but will if achieved please the majority. For those of you who frequent the bulletin boards you may well have seen some of these before but for those that don’t then hopefully they’ll add some food for thought, prompt discussion and hopefully some of those friendly people at Zopa can provide some feedback if possible, as well as likely delivery timescales if applicable:

• The Zopa Triangle - The (dead) zone where money disappears to from your holding account for an indeterminately long time when trying to lend to borrowers. Sometimes also known as Loans currently being processed – can we be provided with more information on this one area rather than just a top level amount?
• Remove all the scrollable boxes that are used in screens like "Offers to Borrowers" "Zopa Borrowers" etc. This is the 21st century - I have a 17 inch monitor I don't need to only use 4 inches of it!
• Summary schedule of expected repayments due over the next 30 days and identifying where any bad debts may have arisen (are there any!?! ;-) ) A similar sort of thing is currently split out by lending offer but ideally an overall summary would be useful of payments received and expected.
• Electronic (automatic) withdrawal of money if required – currently contact with a person at Zopa is required. Automating would reduce the amount of human intervention required and therefore benefit Zopa’s costs, and please lenders!
• Lenders being able to sell their loans to other lenders on an exchange, for a rate agreed by both parties to allow lenders beset by unexpected issues to liquidate their loan portfolio

There’s so much other stuff which has been requested in one place or another. Above is hopefully a non-controversial snap-shot. I’ve pilfered the ideas from other people’s posts in the main so hopefully they don’t mind and I know Zopa have responded on at least the bottom one which is at least a year away – but at least they know about it! I’m sure some of you will be cynical but a number of the requests that have been posted on the discussion boards have subsequently been implemented. Automated re-lending of a sort is now available, details regarding the expected returns on lending contracts etc. After all, the best way to eat the elephant standing in your path is to cut it up into little pieces. So feel free to comment here or even better, come and join some of the other Zygotes, Zucchinis, Zebras and Zebedees (thanks Justin!) on the discussion boards.

Posted in Changes, Guest blogger, Lenders | No Comments »

P2P Parking (First Guest Blog!)

Posted by Roger Dennis at 12:32 pm

Roger Dennis is a technology innovation consultant who has worked in a range of industries including banking. His blog is called IdeaPort. With Dave's recent blogging on parking, it seemed a natural progression to mention an intersection between information trading and peer to peer payment systems. While Zopa blazes a trail and becomes the eBay of banking, people are looking at other applications for the eBay model. One of the more interesting ones is SpotScout which is aiming to trade information about parking spaces. While the website is less than clear about SpotScout works, Wired had a recent piece which featured an interview with the founder. The idea is that if you know you are about to leave your parking space, you send a message via your phone to SpotScout. That information is then broadcast to the mobile phones of people looking for a park. If they pull into your parking spot they pay a fee which is split between SpotScout and you. The website says they are launching soon in the States, and it’s a business which could work almost anywhere there’s parking problems. It could also easily be integrated into in-car navigation systems, and that could be a killer app. It would not be hard to imagine driving down the street, following the stress free, seductive tones of your dashboard GPS, when it announces that there should be a park available by the time you arrive, and asks if you want to reserve it. The only problem with the idea is the acronym. Does peer-to-peer-parking-payment have too many ‘p’s in it?

Posted in Guest blogger, Non Zopa, P2P | 1 Comment »