The internet retail banking business has been growing ever since Zopa’s (Zone for People’s Agreement) emergence in the UK in 2005. The retail banking business was already effective with the traditional banking system. Zopa introduced the concept of lending of money to a pool of people who borrowed. The system is operating strategy included the use of the internet as a channel of borrowing and lending money depending on credit worth examination.
Like many other banking systems, the borrowers would have to be subjected to a creditworthy analysis to avoid fraud. The system includes registering the lender and the borrower by providing personal information. The information helps in communication between the clients as well as tracking the financial progress. However, some information is considered confidential such as the full names of the client, hence the use of a username (Kupp, et. al., 7). In the beginning, few members had joined the organization making them make very little profits from the interest rates. The lenders would state the money they intend to lend, the term and the interest rate. Therefore, Zopa offers cheaper interest rates for shorter terms as compared to other banks who give cheaper interests in large amounts for an extended period. The approach to any case of loan default is conducted in a similar manner to how the conventional banks recover their default loans and also include the credit reference bureau.
Money lending and borrowing are common, but it appears difficult and too formal when borrowing from a bank. Therefore, people would prefer less formal transaction, such as through Zopa while ensuring the credibility of the transaction. The organization ensures that there are various contract agreements between the lender and the borrower. Zopa appears to change the retail banking industry as a result of the modern use of the internet over manual activities.
Work Cited
Kupp, M., Anderson, J., & Raith, Michael. Zopa.com; from hot idea to an established market
player. ESMT European School of Management and Technology. Berlin; Germany,
2014. Print.
