A new study has claimed that the social networking boom could eventually threaten the dominance of traditional lenders.
A study by the Social Futures Observatory think-tank found that many consumers would consider borrowing through online ‘social lending’ communities rather than high street banks and other traditional lenders.
The SFO study surveyed members of Zopa.com, an online lending community, as well as a general sample of mainstream banking customers.
Findings of the survey include:
• 74% of consumers would consider borrowing online through a ‘social lending’ community rather than a high street bank.
• Between 43 and 69% of people felt that the interest charged on borrowing from high street banks was not fair in comparison to the interest rate received on savings and investments.
• On average, 64% of general bankers said that they had received charges from their principle bank which they felt were unfair or unreasonable.
• Nearly 8 out of 10 people of people who have borrowed on Zopa said that Zopa secures a lower rate of interest than offered by high street banks.
Study author Professor Michael Hulme believes social lending offers more to consumers:
“For most people, banking does not provide any form of rewarding or valued experience, it is simply a necessity. In contrast, the community sites we looked at appeared to offer a much deeper appreciation of the individual far beyond the actual transaction."
High street banks and traditional lenders are likely to be sceptical about this report, as the study was partly funded by online financial community Zopa.