ZOPA is a market place for Social Lending, which is where people lend and borrow money with each other, sidestepping the banks. And the more you think about it, the more it makes sense.
Banks have huge overheads, with thousands of employees to pay, hundreds of branches to feng shui, and countless fat cats to feed. And they take far more than their fair share of people's money last year, the Big Five (HSBC, Barclays, HBOS, LloydsTSB and RBS) reported combined profits of over £30bn.
By cutting out the banks with their huge overheads and large margins, both lenders and borrowers get better rates.
Social Lending works because you get a fairer deal on an open marketplace than behind closed doors.
