A Company to Watch: Prosper Could Start a New War on Banking Industry

I have written quite a bit on the potential of social networking and Web 2.0 technology to shake up the banking industry. Now it looks like Prosper, a peer to peer lending company, has jumped a few regulatory hurdles and secured another round of capital.

As usual, here is the venerable Techcrunch article, reporting the story with emotionless journalistic gusto.

http://techcrunch.com/2010/04/16/prosper-raises-14-7-million-for-peer-to-peer-lending-market/

This is exactly the kind of technological/financial development I have been hoping for, and Prosper is only one member of a growing group of peer to peer lending networks.

It may not seem like much now, and the business model for a community like this will easily be intimidated by the recent collapse of Ning.

https://pushaside.wordpress.com/2010/04/15/in-defense-of-ning/

The secured investment is encouraging to be sure, but for these networks to become a real threat to the established banking titans it will require the efforts of bloggers and promoters, willing to put their time and money behind a radical new financial model.

I am planning to create a list of innovative financial start ups with the potential to create more real capitalism and competition in a rotten banking market. Check in as I expand and grow this list. I will watch Prosper, and the other young companies closely.

What do these companies need to do in order to become financially solvent? How can they change our current financial world?

Of course, here is the link to Prosper.

http://www.prosper.com/

Advertisements

One Response to “A Company to Watch: Prosper Could Start a New War on Banking Industry”

  1. I think it is reasonable to say that they are creating a new asset class, something similar to high-yield bonds. They are not there yet because trading on secondary markets is thin. For borrowers, the best side is possibility to lower interest rates. Unfortunately funding is not available to everyone, because today most companies accept applications with quite high FICO scores.

    What peer-to-peer lending sites are doing, is creating people an alternative way of financing and ability to use their money. Although activity is very small compared to traditional banks, it is growing rapidly. Because of fractional reserve banking, every dollar away from banks, is many times more away from bank lending.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: