I’d like to start 2009 with a few words of thanks to everyone who has joined the Spectator readers’ lending team at www.kiva.org/team/spectator. So far we have lent money to over 100 small businesses in the developing world, a figure buoyed by the disproportionate generosity of the Spectator’s Australian readership (including a lady from Cairns in a particularly elegant hat). We still have some way to go before overtaking the largest lending team — 1,700 people from Team Obama, since you ask — but every new joiner helps. And, thanks to the depreciation of the pound, the interest-free loans I made earlier in the year through Kiva (the loans are repaid in US dollars) have turned out to be unexpectedly profitable. So my only successful investment all year has been in a charity; there’s a moral there somewhere.
Of course there is no reason why this kind of small-scale person-to-person lending needs to be philanthropic. One of the joys of online commerce is what’s called disintermediation — the idea that two parties can engage directly in profitable exchange without needlessly lining the pockets of travel agents, dealers, insurance brokers, banks and the other go-betweens you find in the real world. The shopping site eBay is, of course, the most widely cited example of this.
But what works for shopping can also work for money. So those of you looking for a better return on your savings might like to have a look at www.zopa.com. Known, inevitably, as the eBay of lending (just as betfair.com is known as the eBay of betting), Zopa allows you to lend money to people at a rate and level of risk you choose. Lenders have recently enjoyed a return just above 9 per cent after allowing for any bad debts. Your money is spread across a large number of borrowers to minimise risk (though I suppose we’ve heard that one before) or, if you prefer, you can choose to lend small sums to individual borrowers whose loan requests come complete with photographs and short biographies. This allows you to pioneer a new and truly radical approach to financial services — that of lending money to people you think might be able to pay you back. Even if a few of your borrowers default, you’ll have the pleasure of knowing you are being ripped off by people poorer than you are — a pleasant change from conventional banking where you get ripped off by people who don’t even need the money.
But the award for last year’s most exciting financial innovation goes to a West Yorkshire grandmother, Bev Stewart. As reported in the Daily Telegraph (Australia), Mrs Stewart was so sick of bickering between her 25 family members over who got the best seat in front of the television on Boxing Day she held an eBay auction for the right to sit there. After feverish bidding among 17 family members, her daughter-in-law Alexis triumphed with a winning bid of £13.50.
In her own words: ‘There is always arguing over who gets it, it’s the perfect seat. It is straight in front of the TV and has got the coffee table at the side for you to rest your drink on — and the TV remote… so everybody wants to sit there.’ As Monty Python’s Three Yorkshiremen used to say, ‘Luxury!’