Trust is perhaps the key concept that underpins the success of many sharing economy services. Whether you’re renting someone’s flat on Airbnb, hailing an Uber car or getting a lift from a driver registered on BlaBlaCar, you need to be able to trust the other party in the transaction – and they need to be able to trust you.
Building trust in the sharing economy
This trust is created in two main ways: firstly, the service is likely to carry out some form of vetting on the people who use it. So, for example, Uber will run checks on potential drivers, while Airbnb might use social media profiles to verify that both property owners and renters are who they say they are.
Secondly, the users of these sharing economy services then get the opportunity to rate each other once the transaction has concluded. We might be used to being able to give hotels and restaurants a score on TripAdvisor or OpenTable, but the idea of getting reviewed by a taxi driver or BnB owner is a bit of a novelty: nonetheless, the system works. Everyone has a strong incentive to play by the rules because they need good ratings to be able to continue providing or using sharing economy services in future.
Trust and peer-to-peer lending
So how does this concept of trust translate to the financial side of the sharing economy – the likes of P2P lending and crowdfunding platforms?
Understandably there is significantly more government regulation of these areas, something that we at Zopa have pushed for in the past and certainly welcome. When it comes to people’s money it is vital to have official oversight to ensure that customers have a clear picture of the potential risks involved – and to make sure that those risks are kept to an acceptable level.
But trust has an important role to play too. Like any sharing economy service, P2P lending is still a fairly novel proposition for most of our customers and we understand they are only going to entrust their cash to us if they have faith in our bona fides.
Zopa’s approach – safety first
That’s why Zopa took a safety-first approach during its initial decade: by ensuring we lent only to borrowers who represented the lowest credit risk, we managed to demonstrate that consumers could lend directly to other people with confidence and that P2P was a viable alternative to saving and borrowing with the banks.
Now, we and other P2P lenders are capitalising on that trust with record loan volumes this year. And what is particularly gratifying is that our customers are informally “rating” us by singing our praises to friends and family: many of the lenders we have spoken to in our “Zopa meets…” series say they first started using the service following a recommendation from a friend, or that they have suggested others do the same.
The largely positive media coverage of P2P lending also reflects this trust. Financial journalists are generally far too savvy a bunch to give their backing to something that had the potential to harm their readers.
Clearly, some form of state-backed regulation is necessary in the financial side of the sharing economy. But without trust, the sector would be nowhere near as successful as it is today.