Much has been written about how internet has changed our lives and how it is leading us to Life 2.0.
What is often spoken and written about is how the Social Media is changing marketing and advertising as we know it and there is enough of hype around it. And that is missing the wood for the trees. The reality is that Web 2.0 is fundamentally changing and creating new business models. And that some of them are making a difference.
Nothing can be more interesting than those changes in the financial sector. More precisely in the micro-finance/social lending. At a time when every possible scam is rocking the industry. Social lending as a concept is nothing new and has been around for generations. Borrowing from your friends, family and community certainly is not new. The internet has only made it universal, scalable. Just like it did in many other business.
Zopa is first online market place that connects lenders and borrowers. Lenders and borrowers register on the site, get the best deals. No middle men. No extra overheads. Zopa started in UK and is now in four of five countries. Prosper is another player which started in US. Kiva is world’s first international person-to-person micro-lending website where individuals can lend to entrepreneurs across the borders.
DhanaX is India’s first such site. Connecting needy to the lenders. Dhanax works with NGOs in identifying the borrowers. Dhanax works on a ‘for-profit’ model, where DhanaX gets a share of the interest collected. The effective interest to the borrower is about 20-22%. RangDe is non-profit initiatives based out of Chennai, but seem to have consciously stayed out of an online payment gateway (I did not understand why). RangDe aims to get micro loans at a very low interest rate, where the social lender gets 3.5% returns on investment.
Online p2p micro lending is opening a whole lot of opportunities for many of us to be actively taking part in building the economy. And also an interesting example of how digital connectivity changes lives.