SAN FRANCISCO-Zopa, the person-to-person lending initiative imported from the United Kingdom last December to much fanfare, announced it is pulling out of the U.S., leaving partnerships it forged with six credit unions on the ropes.
The participating credit union said the program, an apparent casualty of the current economic crisis, had a slow start in the U.S. and they plan to bring the accounts in house.
"We are disappointed that this didn't pan out or that we didn't have the volume as quickly as maybe Zopa would have liked. I think the unprecedented financial conditions...well, who could have predicted that?" said Deborah Colby, vice president for marketing at First Tech CU.
Zopa's decision last week, said Brian Crum, vice president for lending at FORUM CU, "really has little effect on us. The volume is so miniscule, that it's just not a big impact. We will transfer the loans and certificates to our system."
"We thought it would take a while for this grow, but I guess the economic climate just...it just didn't work out," Crum told Credit Union Journal.
Stewart Fisher, vice president for business development and retail sales at Addison Avenue CU, said the Zopa pullout came as a surprise to the six participating CUs.
"We were very disappointed with Zopa's decision," said Fisher. "It came rather abruptly, to be honest. We had no indication something like that was even being considered by the investors. We were given a relatively short period of time to decide if the six credit unions wanted to try to fund Zopa in order to keep it going. We just weren't in a position to fund it. It was really bad timing in the end."
But he disputed whether the termination of the program in the U.S. represents a referendum on person-to-person lending. "Zopa isn't really peer to peer lending since true P2P wouldn't have a financial institution involved," said Fisher. "Really, it's a social financing network, and I definitely believe there's a future for that. I hope somehow we can get back to that."
"We'll definitely keep an eye on P2P lending, though. I think right now, what's going on the market is turning people back to what's known, to more traditional lending and savings products. P2P: is not a mainstream product in the U.S. The timing is just not right for P2P. We need to get through this storm," he added.
