Financing on the lloyds of London model Feb 23rd Economist article Person-to-person finance Borrowing and lending get personal "THE internet age was supposed to herald hard times for the middleman. Customers, so it was said, would flock to the web to buy products and services faster, cheaper and more transparently than in shops or through intermediaries. Disintermediation has indeed come about, as any out-of-work travel agent or bookseller will tell you. Yet retail bankers-the middlemen between savers and borrowers-have been surprisingly untouched. Enter Prosper Marketplace, a Californian company that matches people who need small loans with others who have extra cash to lend. Prosper launched its website on February 6th. This week, the number of active bids for loans was running at around 200. Lenders have put up some $750,000." "Borrowers, who first undergo identity and credit checks, post bids specifying how much they wish to borrow and the highest interest rate they are willing to pay. Lenders bid the lowest rate they will accept for a given credit profile (based on credit scores, debt-to-income ratios and other metrics) and period. To diversify risk, most loans are made on a "one-to-many" basis, meaning a lender's loan of, say, $5,000 would be spread across lots of borrowers. Zopa's lenders' money is strewn among at least 50 borrowers; Prosper's members can take on entire loans if they like."