SAN FRANCISCO – Taking a page from social networking sites Facebook and YouTube, six credit unions this week will unveil to the United States a new person-to-person lending initiative called “Zopa” that promises to remake the relationship between credit unions and their members.
Describing itself as a “social financing network,” Zopa will connect potential borrowers with lenders over the Internet, with the deposits packaged through credit unions as federally insured CDs. Advocates see the project, begun in Britain and expanded into Europe, as a way of bringing the credit union philosophy of people helping people to peer-to-peer lending.
“We’re taking the tools of financial services and changing them and using them in such a way that a person can use them to help themselves and someone else at the same time,” Wade Lagrone, chief marketing officer for Zopa, told The Credit Union Journal.
“This is not first and foremost about rate, it is first and foremost about help,” Lagrone said. “Credit unions pioneered this philosophy. Zopa has merely added to this philosophy by using technology to make it more transparent to the consumer. We are simply continuing a tradition that began with credit unions.”
The initial products are being offered exclusively through Addison Avenue FCU, Affinity Plus FCU, First Technology CU, FORUM CU, Provident CU and USA FCU.
Initially, they will offer two products: a basic share certificate and an unsecured personal loan. The Zopa CD will 5.1% (or less if an investor chooses to earn less on the CD in order to help the borrower pay it off faster) and the Zopa loan will charge 8.75% (or less if an investor chooses to help the borrower by taking a lower CD rate).
More about the Zopa partnership with credit unions:
