Last Friday, I interviewed two of the the founders of Zopa, a new organisation that is a kind of "eBay for Money". Zopa is a British company that creates a new market for individuals to lend and borrow money, bypassing the banks altogether. Zopa makes a 1% charge for matching up borrowers and lenders and provides essential infrastructure to support the lending process.
This interview gives some great insights into the vision behind Zopa, a brand which I think is a radical new departure in financial services.
It will be very interesting listening for anyone who has followed the long discussion here about co-creation.
I was excited by what Zopa is up to, and this interview gives some great insights into the innovative thinking behind the organisation.
The interview lasts just under 33 minutes and features Zopa's CFO, James Alexander and its Inventor, Dave Nicholson. My apologies for occasional lapses in sound quality - I think you'll find James and Dave well worth listening to.
Download the Podcast - 32.32 - MP3
0.00 Introductions by Johnnie Moore
0.20 Dave Nicholson explains Zopa is a lending-borrowing exchange, aiming to give borrowers and lenders more control over their finances. "We're not a bank... we're a way for people to lend and borrow money between themselves"
1.03 James Alexander emphasises that Zopa is an idea that is likely to adapt. They are at the beginning of a journey.
2.50 James: the core idea is about people trusting people with money
3.40 James: "99% of people are good and 1% of people are bad. Here is an industry that's set itself up to serve the 99 but through lens of the 1% that's bad. And what we'd much rather do is... create a sort of perimeter fence to keep the 1% out and then let the people within (be in) a much better position to work out how they exchange and what the appropriate rates are and what the appropriate products are... work that out for themselves...
...The central planning, product management role of the world shouldn't exist... why does someone sitting in a head office somewhere who's a product manager design products for everybody when people are better able to do that for themselves..."
4.40 Johnnie talks about fear and greed as the main levers used in traditional financial marketing and explores how Zopa breaks this pattern. James talks about how Zopa research showed how people wanted more control over how they transact. He says Zopa uses new technology to support an old idea: people lending people money; and talks about how people might be able to lend to specific communities or for specific causes.
7.40 Johnnie contrasts the exploratory style of Zopa with conventional marketing. Dave and James talk about the importance of customer feedback in shaping Zopa's approach. There's a discussion of the role of bloggers in this process. James says he is "stunned by the speed of response from blogs" and the "depth and quality of the input" If this had been paid for like traditional consulting advice, it would have cost "thousands if not hundreds of thousands of pounds."
10.20 How does Zopa contrast with egg, where Dave and James worked before? How did the idea start? They talk about how the idea of "eBay for Money" came into being, meeting the needs of consumers who want more control, and looking at why companies get better financial deals than invididuals.
14.25 Where might this evolve to? James reveals that they don't think of themselves as a financial services company. Their first move might be into social lending, moving on from setting loans only by term and risk category. What if you wanted to support, eg, social housing in Liverpool? The customers themselves could decide what markets to work with. There's a plan to expand into the US, where there is already a team at work for Zopa.
17.20 Johnnie talks about the possibility of using Zopa to help people currently trapped by money lenders with high interest rates. That this might offer him more incentive than just a better interest rate. James comments that Zopa hasn't so far emphasised the idea of customers becoming bankers themselves, but they could allow this idea to evolve. The opportunity for Zopa might not be in the prime market.
19.52 The theme of co-creation, where customers help to define the product. Dave gives one example of the sort of customer interaction they want to help build. James elaborates on the theme of co-creation and how, for instance, they are hoping to reinvent the way risk rating is done, getting away from credit-scoring... a system that denied their own CEO a mobile phone account! He talks about how eBay's system for assessing trust offers pointers to a quite different approach. Zopa wants to develop more human ways to help borrowers and lenders evaluate risk. "Zopa is a trust entity, that's all it is" Zopa shares credit ratings with customers, a different attitude from the banks.
25:50 James talks about the challenge of offering freedom of information while keeping a simple user experience.
26:25 The subject of "freeformers" is discussed. This term describes a growing group of consumers who distrust institutions and emphasise creating new ways to live lives that accord more with their values. James talks at some length about what Zopa understands about the needs of this group, based partly on ethnographic research in finding out what customers really want (in contrast to conventional market research). He believes these freeformers have needs that simply aren't satisfied by conventional banking.
31.30 James talks about how Zopa's own people are freeformers, often working more as consutlants rather than employees. Johnnie relates this to the attitudes of many bloggers.
Download the Podcast - 32.32 - MP3