I first heard about Zopa.com earlier this year. I thought it was a wacky idea, but it looks like its getting more and more popular. (Zopa’s current only for UK residents).

Zopa is basically an online market place, modeled somewhat after eBay, where people can borrow or lend money to other people online. They minimize risk by numerous ways, one of which is to spread the borrowed money amongst 50+ lenders who are lending money at similar rates. (How Zopa works).

.. Of course this would all be very complicated and risky if everyone traded one-on-one with each other, so Zopa glues the whole thing together with its offer matching system. This divides the lenders’ offers up into small chunks and distributes them around potential borrowers – at least 50 in fact. Each loan a borrower gets is made up of lots of bits of lenders’ offers. No one gets to borrow from the same person twice.

It’s all very neat I guess, and I have no idea how they’re regulated.. but apparently there are plans to try to take it to the US, which I think is a very, very bad idea. Stuff like this is just asking for abuse.

I’m not sure if this is how UK companies market their service, but the site seems to be littered with cliche words, sorta trying to push some kind of “empowerment” onto the consumer, as if bypassing the banks and lending/borrowing directly to each other is such a safe and reliable thing.