Peer to peer lending is on a course to shake the foundations of human society. Normal everyday people who need to borrow are connected seamlessly with normal people who have extra money to lend. Both borrowers and lenders get a better rate than they would almost anywhere else, and they do this because peer to peer lending is inherently efficient. It is, de facto, loans without banks. And yet I have not met anyone in the real world who knows about peer to peer lending.
This has to change, and LendingMemo is being launched today January 23 to help that happen.
The goal of this site is grand: to herald a new arrival of authentic financial connection. Never before in human history has it been possible to generously loan our extra cash to strangers who need it, and do it efficiently on such a national scale.
This goal will be accomplished in three different ways:
- By analyzing and understanding peer to peer lending
- By educating the public about it
- And by holding the industry accountable
Let’s go through each of these approaches, one by one.
Analysis, Education, and Accountability
First is the value of patient analysis. Peer to peer lending is a brand new practice that is still being configured. As a result, we need there to be places of consistent dialog, patiently walking with this industry as it streamlines its model. My commitment to you is one of process, that the complex journey that platforms like Lending Club are taking will be simplified on LendingMemo, so as to be understood by the average user (i.e.: we are going to be getting deep into the statistics and CSV files of these platforms).
Secondly, this site is being launched as a center of education around peer to peer lending, with particular attention given to promoting the intelligence of people who are trying to become more involved. Too long has peer to peer lending been an investment channel for those of us who happen to be savvy at finance or technology. Normal everyday people who have extra money to lend possess adequate intelligence to become involved in peer to peer lending as well; they simply need to grow in familiarity with its terminology, something tech and finance people have not had to do.
Finally, LendingMemo will exist as a voice to keep industry leaders accountable. Essentially, peer to peer lending is the beginning of a digital restructuring of the entire credit industry, from mortgages to private student loans. The result of this change is the loss of revenue for large portions of the financial district, and I am curious if (through lobbying congress, hostile takeovers, or whatever) these parties will be so willing to lose these sources of income. Retirement accounts are a massive component of Wall Street’s power. What if there was suddenly less people investing their IRAs and 401Ks through Wall Street’s intermediary? Would they be OK with this? If history is any lesson, I believe they will not be so amiable. The auto industry bought out the American trolley system in cities like Los Angeles and Baltimore in the early 20th century because mass transit was a detriment to their industry. Similarly, the music industry fought tooth and nail against the proliferation of MP3s, a fight they eventually lost. Imagine the largest power on earth, the financial sector of the United States and Europe, being faced with this same prospect.
These three goals will be achieved largely through grassroots collaboration like what I hope to have on LendingMemo. I am eager to provide a thriving comment section for feedback to the long-form articles that will be coming. It is my hope that together we can usher forth this innovation, and experience a new financial connection that impacts our society for the better.
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[image credit: LA Times ‘Awaiting Destruction‘ CC-BY-SA 3.0]