> Posted by Center Staff
Borrowing money from family, friends, or acquaintances is nothing new, of course. Whether it’s a spur of the moment decision or a more structured arrangement, sidestepping a formal financial institution for at least some of your cash flow needs can be attractive.
The technology community has started to recognize an opportunity in entering this space. Puddle, a smart phone application-based service that allows you to create a “bank” with your friends, was launched late last year.
With Puddle, you and your friends form a collective bank, contributing funds, deciding who can be members, and what the borrowing interest rates will be. The service is set up so that the profit made off of interest is distributed back amongst group members. Puddle is still in early launch stages, but currently you can request an invitation to try it out. Here’s a screen shot of what the browser-based interface looks like. It’s advertised that no fees or applications are associated with the service. A similar smart phone application-based social lending service, Lendstar, currently in beta, was launched earlier this year.
Would you be willing to use an app service and lend money to your friends? One detail that isn’t clear for either app was what happens when someone defaults on their loan repayments. An important detail…depending on who your friends are.
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August 30, 2013 at 11:06 am
Paul Rippey
Hi Center!
I am a Puddle member, and simply point out that Puddles are as much or more for saving as borrowing. Might you want to rename your post, “Would you trust your friends with your savings?”
(I try to point it out every time I see the tacit assumption that people dream of getting deeper in debt and have little interest in saving, but there aren’t enough hours in the day!)
Anyway, there are a couple of posts about Puddles on Savings Revolution. Jean Claude Rodriguez, the founder of Puddles, talks about the question you raise of defaults and trust in a post called “Trust made easy” – check it out:
savings-revolution.org/blog/2013/5/22/trust-made-easy.html
(I don’t know about Lendstar, but the name suggests a lot).
Best,
Paul
September 11, 2013 at 7:51 pm
Julie Peachey
It’s quite interesting that the developed world is taking on informal savings and loan group practices that the developing world has used for centuries! We should always remember that the exchanges of best practices can go both ways!