Virgin Bank of Canada?

When it rains it pours. First IOU Central opens up as the first social lending platform in Canada, and now Richard Branson has announced, somewhat coyly, that he will be moving his Virgin Money brand into Canada.

All the problems and frustrations that people find in the mobile-phone industry they also find in the banking industry here. The banking industry is ripe for a strong competitor here.

All of this, and CommunityLend is still moving forward to their early 2008 launch. Makes me think that Canada will have a very different financial landscape before 2008 is up. Quite a game changer…

IOU Central is Canada’s first social lending platform.

IOU CentralFor all my interest and excitement about social lending, I have not been able to use a social lending platform because there wasn’t one available in Canada. Then, this morning, I read on NetBanker that IOU Central has launched, making them first out of the gate for Canadians.

I had heard that there was a group in Quebec working on this, but I had assumed my friend Colin Henderson would be first out to market with CommunityLend, which is launching early this year.

I’ll give IOU Central a try and report what I find. As I’ve written before, my main question, one that is about to be answered, is: will Canadians who love to hate their five main national banks engage in social lending, or will we complain but stay put?

Interesting times…

Thoughts on the social economy.

At Vancity we have been talking a lot about the social economy. There is some extremely interesting conversation going on about what this term means, and I wanted to take a minute to jot down my thoughts on the topic.

As a starting point, it’s good to know what Wikipedia says about the social economy:

Social economy refers to a third sector in economies between the private sector and business or, the public sector and government. It includes organisations such as cooperatives, non-governmental organisations and charities.

While I like this definition from a credit union/triple-bottom line perspective, I don’t feel like it’s as broad as the concept wants to be.

To me the social economy is the same as what others call the reputation or conversation economy. From the time humans started trading what they had for what they needed, we had a social economy. People’s knowledge of the others they were trading with was a crucial factor in those trades and dealings. The industrial age added a level of anonymity into our economy and set us up to pay fixed prices for goods and services from the money we earn from our labour. The information economy didn’t change this at all.

Now the emerging social tools we have at our disposal is merging these economies together in a way that brings a social component into our modern age. We have a global water cooler, allowing us to share information, connect and trade with each other and lend directly to each other in ways that weren’t possible ten years ago. Companies like eBay, Craigslist, CommunityLend and Wesabe allow for social transactions that bring a greater element of trust and reputation into our purchases and financial dealings. This makes it social, and models that leverage our innate desire to be social should be more successful in this new age.

I believe the definition of the social economy is broader than what is written in Wikipedia.

At Vancity we recently created a division called Social Finance. Lots of people have been asking what social finance is. Here’s what Wikipedia has to say about social finance:

Social finance is an approach to managing money that delivers a social dividend and an economic return. Social finance includes community investing, microlending, and sustainable business and social enterprise lending.

I agree with this Wikipedia definition entirely. Social finance is an engine that drives the social economy, but is firmly rooted in creating positive social and environmental change from investing in companies and initiatives that generate a return on the money invested. It is all about the power of including what are often considered externalities in our financial transactions.

As I explore these issues, I’m hoping you’ll lend your voice and tell me what you think.

CommunityLend brings social lending one step closer in Canada.

CommunityLendColin Henderson, who as The Bankwatch is one of my very favourite bloggers, is one step closer to making CommunityLend a reality.

CommunityLend is:

An online community where people can lend money directly to other people in a safe and secure way. It is an exciting and unique lending service for Canadians that will revolutionize the way lending works in Canada.

I asked Colin about his new venture and here’s what he told me:

I look at the Canadian Banks’ involvement in the US Sub Prime mortgage market, and the fact that over $2Bn has been lost there by Canadian Banks. That’s an enormous loss. There is a need for greater transparency for people seeking a return on their money, and what they are investing in. Social lending not only eliminates those issues, but provides a better return for borrowers, and lenders.

Colin deserves a lot of credit for his outstanding blogging on the Sub Prime and ABCP situation, while many others have skirted around the issue or moved on. I have learned a lot from reading Colin’s editorials on this situation, and have a lot of faith in his opinions and his ability to create alternatives to the lending and borrowing options Canadians have today.

According to Colin’s blog “2007 was a long year, as we raised our funding, and organised the management team (of which he is Chief Technology Officer and Co-Founder).” They’re aiming for a Beta launch in early 2008, which means those of us north of the border can finally kick the tires on the services that several companies around the world have started, including Zopa, Prosper and Lending Club.

CommunityLend’s website, very recently updated with information (for months now it’s been a teaser with no real information) says that:

The unsecured consumer loan marketplace in Canada exceeds $100 Billion in volume every year and generates interest payments on those loans exceeding $15 Billion annually… Today in Canada, this very profitable industry is also a very closed industry, with only a handful of major companies involved… CommunityLend intends to democratize lending in Canada by opening up this billion dollar industry to other Lenders interested in participating. Share the wealth, we like to say!

They’re also obviously going to have a big community component around people’s borrowing goals. Knowing Colin, they’re going to tackle all of this very, very smartly. I can’t wait to try it out and see how it works.

Stay tuned…

Discovering kiva.org

In all the recent posts I’ve been reading about peer-to-peer lending, including the excellent reporting by Jim Bruene at NetBanker and Colin Henderson at The Bankwatch and CommunityLend, I hadn’t come across Kiva.org.

I’m very excited about social personal finance and think it may well change the way people exchange money when they just need to borrow or invest a small to medium amount and don’t want to bother with a bank or credit union.

But tonight my aunt showed me Kiva.org, and I got to admit I was a little embarrassed to admit that I didn’t know what it was. It’s an amazing concept where anyone can make microloans to people in the developing world who need small amounts of money to start an enterprise. According to their website:

Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can “sponsor a business” and help the world’s working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you’ve sponsored. As loans are repaid, you get your loan money back.

You can cash out when you’re repaid or reinvest it into a new opportunity. I think this is genius. Did everyone else know about this and somehow I’m the last to the party? Hard to be shown up by my aunt after all…

I started tonight by investing $25. Kiva.org asks you for a 10% addition as a donation to keep them running. That’s optional. You can pay by PayPal or credit card. When you’re done you can easily send the info about the cause you donated to to your email list to spread the word. Nicely done.

Here’s who I donated to: Massan Aziado of Togo. Fantastic and inspiring!