Social Lending & Paypal To Boom

Gartner has a report suggesting that financial institutions need to react to non-bank competitors like Paypal and Zopa or risk losing control of the financial relationship. They say that 10% of lending will be through social-lending platforms by 2010 and Paypal and similar services will take 10% of banks’ revenues:

By 2010, social-banking platforms will have captured 10% of the available market for retail lending and financial planning.” Yeah, but ING which was strutting around with its Second Life presence during a Financial News banking conference in London in late spring, has just announced it is pulling out of the avatar world.

“By 2010, 10 percent of banks’ revenue from retail payments will be supported by competitors such as PayPal.” This is real. I was talking about PayPal with a UK banking expert over lunch in London today and he says that small businesses are finding PayPal cheaper and easier to use than getting a credit card account. But he also said that PayPal, as it grows, will face some of the usual enterprise-resilience and security issues. By 2010, U.S. banks will start shutting down their full-service mobile-banking channels.”

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[via Johnnie]