ORLANDO, Fla.-Social lending through peer-to-peer websites could make up as much as 10% of all retail lending in just two years thanks to changes in the way individuals make decisions and gaps in conventional practices, one industry expert contends.
Sarah Dekin, chief marketing office at Virgin Money said about $89 billion worth of loans take place between relatives and friends, and social lending sites are capitalizing on that phenomenon.
"There is a real desire to help those that [we] know," she said, noting that P2P sites provide a platform for lending that ensures relationships remain intact and individuals still get their money. "The most important thing to us is the relationship, but the second most important is getting the money back."
The swift penetration of the Internet into homes (the Web is accessed by 73% of all Americans) and the rise of websites like YouTube, Snapfish and Facebook are taking financial decisioning online. While credit unions and other conventional institutions usually make their lending decisions based on a credit score, social lending websites allow those who do not have good or extensive credit history nevertheless obtain loans - sometimes at very competitive rates.
"It's just a whole lot easier to get in touch with people" online compared to conventional lending methods, Dekin maintained. "There are people out there who know me as a person who can make a more informed decision."
