It is rare to find a banker these days who doesn’t wax eloquent about the loan market at the bottom of the pyramid. But just as large companies learned to sidestep banks and borrow directly from investors, is microfinance, too, ripe for some disintermediation? Can the poor borrow directly from you and me?
Popular auction site eBay has inaugurated a new site that will allow people to lend directly to entrepreneurs who are poor. This is not the first experiment in direct online microlending. Various peer-to-peer lending sites have cropped up in the past year or so. Groups using iconic social networking sites such as Facebook have also taken a shot at this growing market.
Some of the more radical believers in P2P lending claim that it will do away with banks altogether. That is hard to believe. But these past few years have seen a lot of innovations in the method of lending to the poor. Banks should not take their market for granted.