Social lending site Zopa is to launch in Japan, following its expansion to the US and Italy from its UK base. The site, three years old today, brings on board a new Japanese team in the form of chairman Takeshi Yoneda and CEO Tatsuya Kuboi, both experienced in Internet financial services. Zopa has attracted over £18 million of funding, including that from VCs Benchmark Capital, which has also invested in US competitor Prosper.
Zopa is an online marketplace where people meet to lend and borrow money. With no bank in the middle, both parties can get better rates. Since March of 2005, Zopa has handled more than £20m in unsecured personal loans in the UK. It recently launched Listings, allowing individual borrowers to post their own specific requests for loans for individual lenders to review and then bid against them.
However, although Zopa was the first, there are now more than 20 person-to-person online social lenders around the globe. Gartner predicts that by 2010 social banking will make up 10% of the banking market. Zopa says the current credit crunch is driving customers to them as banks tighten their lending criteria. Borrowers can get lower than they can get from the banks, with the low default rate set at less than 0.1%. In the UK it has 190,000 members.
Its peer to peer lending service differs from US rivals by working with credit unions to offer person-to-person loans instead of a loans coming directly from lenders on the service. In the US interest rates on five year loans can range from 8.75% to 16.99%, depending on their credit risk. GlobeFunder is a yet-to-launch US competitor which launched in January this year.