New Scientist is reporting on alternative means to borrow and lend money – without the Banks. I like this – if we can’t lessen the banks’ power via a responsible and uncorrupted government, maybe we can have some effect by withdrawing our business. ~ Ilene
Bank says no? Ditch the bank – borrow from the crowd
By MacGregor Campbell at New Scientist
Excerpt:
What you might not know is that there are technology solutions for banking every bit as powerful as social media such as Facebook that can step into the gap, making it possible, this very minute, for you to borrow or lend money safely online, completely independent of an actual bank. They’re called peer-to-peer (P2P) lending services, and they have been around for years. This kind of "citizen banking" should be reshaping the business of borrowing and lending, and shaking the foundations of the financial industry in a way no amount of Occupy Wall Street protesting could accomplish. So what’s the hold up?
P2P lending started in the mid-2000s, when sites like Zopa in the UK, Prosper and Lending Club in the US, Smava in Germany, were founded on an obvious yet daring principle: that in the connected, high-tech 21st century, it should be possible for ordinary people to take the place of banks.
The idea is simple. Lenders meet borrowers through a website that is something of a mash-up between eBay and a social network. To borrow money through Prosper, for example, you set up a profile and apply. The website assesses your creditworthiness, then assigns you a grade and an interest rate. Lenders can then weigh up these criteria to decide whether to finance your loan. They review borrowers’ profiles much as one might review profiles on a dating site, and can finance anything from $25 of a requested loan to the whole thing. Your monthly payment goes directly into the lender’s bank account, including interest. Every part of the process takes place online.
Full article: Bank says no? Ditch the bank – borrow from the crowd – tech – 12 December 2011 – New Scientist.
