Here is something I discovered that I confess I hadn’t been so conscious of, and stumbled across in doing research for a thought piece on microfinance, specifically microcredit. It shouldn't be surprising that this paradigm-shifting concept, borne out of the constraints of the developing world, has people in the developed world holding it up to the light and wondering how it can apply here.
We all know about how microfinance has been a transformative element in addressing poverty; Mohammad Yunus is a rock star, Natalie Portman was the spokesperson for FINCA, and MercyCorps TODAY announced a wholesale bank (called Bank of Banks) that will help expand and strengthen microfinance institutions (MFIs) in Indonesia (there are some 50,000 there). A recent Time piece also alluded to how for-profit institutions are massively entering the microcredit space, creating an interesting tension around the topic of balancing the do good/do well proposition.
And I knew that individuals were getting into the microcredit game and being personal MFIs--I knew about kiva.org, which famously has had, at times, so many would-be lenders that they have had to send them away and ask them to come back another time. And here's MicroPlace, a newer site run by eBay and another that allows individuals to make loans to people in developing nations. (Incidentally, there are also MFIs emerging that allow people to apply for microloans; one I love is Elmseed--it's a foundation started by and largely staffed by Yale students, focusing on loans in the New Haven area; but if you're a New Haven prospect, you can apply for loans online. And by the way, it's largely assumed that microcredit won't work to address the needs of the poor in the US, partly because of greater regulation--I think this is a problem in search of a solution!)
But back to where innovation has morphed beyond the social: What I didn’t realize was how much momentum peer-to-peer lending for more pedestrian reasons like sending a kid to college, or consolidating debts. To wit: Prosper, which I admit has gotten lots of attention lately and I've somehow spaced, LendingClub, and Zoba (in the US now.)
It's an intriguing trend, saying as much about the general propensity of the Internet letting people simply disintermediate and roll their own, as how generally scary the whole credit world is, even in the rich countries.