"Sensible" borrowers: constructing "peers" in peer-to-peer lending
John McKNight (Lancaster University)
Adam Fish (Lancaster University)
Paper short abstract:
Combining ethnographic work with critical analysis of web design and content, this paper examines the rhetorical construction of “peers” within an emergent financial system of peer-to-peer lending.
Paper long abstract:
Recently peer-to-peer ("p2p") lending systems have emerged as a popular vehicle for unsecured consumer and small-business lending. Where crowd-funding systems operate as a mixture of charitable donation and pre-purchase, p2p lending involves the exchange of funds at commercial rates of interest, competing largely in the personal-investment market on price, by "disintermediating" banks with high overhead costs. Instead, p2p lending companies operate on a small scale, without investment in physical branch offices or legacy infrastructures, evaluating borrower credit risk and ensuring a close match between supply and demand for investment funds. P2p finance distinguishes itself from traditional investments by stressing financial flows as running between ordinary individuals and small businesses, rather than to and from faceless and distrusted global financial institutions. Zopa Limited, a UK p2p finance company and the subject of an ongoing ethnographic study, draws this distinction through the rhetorical creation of "peers," constructing a narrative through its website, the exclusive point of contact with the p2p lending process for most of its users. This narrative focuses on two words particularly resonant with Zopa staff and customers: "sensible" and "fair." These terms are mobilized to construct lenders (primarily professionals near retirement age) and borrowers (primarily young families) as intergenerational equals, united in financial prudence. Combining ethnographic work with Zopa staff and customers with critical analysis of Zopa web design and content, this paper examines the construction of borrowers and lenders as "peers" uniting in an alternative to an obscure, distant and untrustworthy global banking system.
Generating value and valuation as collaborative practice