Online Social Lending: Borrower-Generated Content

This article explores online social lending, an innovative venture that represents a reintermediation in financial services. Borrowers and lenders now have access to online financial information services such as Motley Fool, http://www.fool.com/ , and the opportunity to communicate directly with each other online, sharing user-generated content, in the spirit of Web 2.0. In this environment, new possibilities emerge. Drawing on the literature of community banks, finance, and online banking, we conducted a structurational analysis of ZOPA(2007) a newly founded venture in online social lending whereby borrowerlender interactions take place within an open and transparent environment using discussion boards and blogs. ZOPA offers a service as an intermediary but one that differs from the intermediating role played by a traditional bank. We analyzed the possible attractions and risks of ZOPA’s service to customers, from the perspective of social lending and social networking, using public data from ZOPA’s website. Our intention is to understand the nature of this reintermediation and explain the development of this process through Giddens’ propositions.