Prosper.com the US peer to peer lender has recently announced the launch of a new loan exchange where personal loans can be traded on a secondary market. Interesting concept as the loans are originated by Prosper approved financial institutions and then traded on Prosper where lenders can bid the interest rates on these loans.
This open market is a further example of the effectiveness that digital platforms can have in setting fairer and more transparent prices and allow for more effective distribution of risk amongst a wider set of lenders. We’ll be watching and seeing how this new product and exchange takes off in the US and maybe consider this for Australian borrowers and lenders in due course.
In Australia it is still early days for the P2P loan market which Lending Hub is building and developing but in the US there’s a great deal of innovation being driven by the size of the market and the tightening of credit by the financial institutions following the sub-prime credit crunch.
