Peer to peer lending, as it is known in the United Sates and the United Kingdom with companies such as Zopa, lend directly from a group of investors, direct to personal borrowers.
The cutting out of much of the large infrastructure that a traditional bank has means the loan rate can be slightly lower and the investment can get a better return.
The only peer to peer lending platform currently in Australia is SocietyOne.
Greg Kirk at the Australian Securities & Investments Commission is restrained about this new and evolving form of personal finance.
"It's probably unlikely that it's (peer to peer lending) going to take on the Australian banks as these sorts of businesses won't have access to the sorts of capital that the big Australian banks have access too".
Listen to the full interview with Greg Kirk above.
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