Giles Andrews on building Zopa, it’s brand and differentiating from banks.
Zopa has run a member competition, asking members to explain how Zopa works for a borrower or a lender.
I watched several of the created videos. My favourite is the video below by Glenmation.
No, that is not a typo in the headline. British Wonga.com offers small, short term loans online (short term= from 5 to 30 days). The main advantage they advertise is, that the loan amount is transferred to the bank account of the borrower within minutes of the application, if approved. For that quick service Wonga charges 1% interest per day (!) plus 5.50 GBP transfer fee. According to the website that translates to an typical APR of 2334 percent.
British laws must be very liberal to allow this. In many other European countries interest rates like this would be illegal under consumer protection laws against usury. But Wonga does have a consumer credit licence from the Office of Fair Trading.
And naturally Wonga does not see itself as a loan shark. Read here, why they think their rates are appropriate. I do pity the borrowers that borrow at that interest rate.
EDIT: Interview in the Guardian with Wonga founder Errol Damelin states that Wonga had 50.000 customers during the testing phase.
EDIT Feb. 11th: See the comments for a discussion with John from Wonga.
(Photo credit: Demi-Brooke)
Prodigy Finance has an elitist approach. Only MBA students of selected schools are eligible as borrowers:
We have built our model with the specific profiles of top international MBAs in mind. Our close partnerships with the schools means that we are able to approve the vast majority of applications and are able to lend to participants from most countries (…). Provided you are accepted at one of our partner schools, it is very likely that we will be able to approve your loan in principle. However at this stage it is important to remember that we are still in pilot stage and thus our ability to provide funding is limited by the size of the funding pool that we have.
But that’s not all. Lenders are required to be alumni of the school, too. Minimum investment amount is 10,000 Euro. Loan term is 7 years with a 16 to 18 month grace period. Interest rates are tied to the underlying base rate.
Currently only borrowers and lenders from INSEAD are accepted.
The interesting part is that Prodigy Finance aims for cross-border, multi-currency lending:
The currency of the loan balance is determined by the currency in which tuition fees for the university are paid. If you are only lending to one university, your funds will be held in that currency alone. If you choose to spread your funds to other universities, we will convert your funds at the best available rate (and with your consent).
Prodigy Finance was founded by Cameron Stevens (CEO), Ryan Steele (COO) and Miha Zerko (CTO).
