The always excellent Deutsche Bank Research (when will they get an RSS feed!) produces a nice summary financial2-0.pdf of the issues in P2P lending, and the industry leaders, Prosper and Zopa. Review of the issues here at BankerVision, where the debate is whether P2P lending will create new markets, or cannibalise existing ones.

James also refers to an interesting point of view that P2P will merely encourage Banks to become more efficient and eliminate waste in their processes. Nice thought, but the counter internally will always be a combination of inertia, and risk management.

My position would be that Bank’s will lose and be forced out of certain markets by efficient firms – I only base that on sad realities of the past, with examples of Mutual Funds, and Mortgages. I would include Eloans in this category too. With regard to new markets being created, I won’t rule that out. P2P may well pick up lending that may have been handled between family members for example, and some P2P’rs will in fact facilitate that.

Back to the DB Research, this chart nicely summarises the marketspace. Note that in these business models:

• peer pressure = Zopa
• diversification = Prosper.

tags: P2P+lending, zopa, prosper