Last month, a very senior figure at the Bank of England – Andrew Haldane – made an important speech in New York and put a number of very lively cats amongst the pigeons of banking. He said:
“Small peer-to-peer lenders like Zopa could in time replace High Street banks. These firms could be revolutionary. At present, these companies are tiny. But so, a decade and a half ago, was Google. If eBay can solve the lemons problem [duff products] in the second-hand sales market, it can be done in the market for loans".
Zopa and the wave of peer-to-peer innovation it has kicked off has been singled out before by policymakers like Haldane – as examples of how deep innovation can bring powerful new competitive pressures to bear on the apparently sleeping dinosaurs of the banking sector. Zopa has been mentioned in no less than four White Papers across two Governments now and continues to be a favourite poster child for the Coalition when envisaging the bright new world that UK technological innovation can bring about – even in the City.
Mr Haldane’s comments have clearly served to raise the profile of how Zopa is disrupting finance to give people a better deal on their money. But he is not the first distinguished commentator to draw parallels between Zopa and the impact Google has had on access to information, Amazon on the market for cheap books and eBay on the ability to find, buy and sell “stuff”.
This increasingly bright spotlight helps to make these prophecies come true. Despite the crucial nature of competitive priced loans and inflation-beating returns to the public’s well-being, radically better deals on money tend to be less head-turning than easy, cheap access to your favourite music, books and gadgets, that vintage Fender guitar you always wanted and information you’re after about, well, anything. However, as more and more people have enjoyed some of the cheapest loans available and returns on their savings that have easily beaten inflation when not a single bank account did, public awareness of Zopa’s offering continues to grow.
So three cheers for Mr Haldane, his fellow luminaries, and the press for picking the story up so enthusiastically. Even today’s LEX column in the FT cites the importance of the P2P finance movement. They have all helped make more Britons aware of the better way that there now is to borrow and save money, something as essential as it gets. Let the disruption continue!