Will Zopa's P2P loans mean the death of the bank manager?

I can't remember where I first heard about Zopa but it has been making waves. Put simply, it is a web-based borrowing and lending exchange that is seeking to do to bank managers what Betfair has done to the average high street bookie - disintermediate them.

Now the phrase 'disintermediate' might sound very Web 1.0 but it sums up this venture perfectly. Typically banks lend out to individuals at one - typically high - rate of interest and they allow you to save at another - typically low - rate of interest.

It doesn't take a genius to work out that the difference between the two - say between seven per cent and three per cent - is where they make a lot of money. Clever them.

But, just as with traditional bookshops or supermarkets or any number of businesses, real world banks have overheads for things like premises. A Zopa doesn't.

So back to my opening line. Where did I first hear about them? To take part in Zopa, whether as a borrower or lender, you first have to join. When joining, you have to choose from one of the longest dropdowns on this subject I have ever seen.

Unfortunately, 'from someone at a tech investors conference who has advised the company' isn't one of the options. But still, by that stage I was sold.

Behind Zopa are some of the people who launched Egg, the internet bank. I have been a pretty happy Egg customer for a number of years and some of the trademark marketing attitude shines through at Zopa.

There are signing up bonuses - right now there's a charity donation of "a brood of chickens to an African family on your behalf" - and the general language and approach is snappy. I even read the page of 'Zopa Principles' (terms and conditions?) and there is a good explanation of what a credit rating is and how their system spreads risk across borrowers and lenders.

The security is more straightforward than with some financial services sites, though it is still based around - admittedly well-explained - password systems.

The idea is that you get credit scored (they use Equifax) and then - if you are a lender - put in an offer to lend a certain amount, over a certain time, at a certain rate. There is then a 'buyers market' - people looking to borrow money, and those with a lower credit rating go down the path of borrowing at a higher rate.

At the time of writing, I have £1,000 on offer - to be spread across 50 individuals, at £20 per head - at a rate of 8.5 per cent over 12 months. After half a day, I have no takers.

My gut feeling is that I have gone in too high but we shall see.

I must admit that upfront I love the idea of Zopa. It gets its name from 'zone of possible agreement' and the idea of cutting out some of the fat in between the two sides of the loans equation is appealing.

But what of the downsides?

I decided to time how long the process would take me. Now I have to hold up my hands and admit I was slightly distracted. I had to deal with tapping my foot to Franz Ferdinand, keeping track of the last round of the Masters golf and my cat jumping up on my desk every 10 minutes. (He goes after the mouse.)

Getting signed up and jumping through all the joining stages mentioned above took about 50 minutes. And then I hit a wall.

I managed to join, managed to understand how it all works - even managed to smile at the whole "brood of chickens to Africa" thing, and not worry about bird flu. But when it came to putting my money to work, I realised I couldn't simply put in my credit card details.

Unlike most e-tail websites and even poker sites - a main reference point for me here - I couldn't simply use a credit card. I had to either transfer money using PayPal or do an online bank transfer. I don't have a PayPal account (maybe if I was an eBay fan I would), and so the latter option took me three days.

Starting my stopwatch again three days later, it only took a further 10 minutes to put my money on the open market. So, in a sense, until I see who takes it and what happens after 12 months, the jury is out.

I'm optimistic - for example, Zopa factors in defaults on a proportion of loans to get the rate you requested. Remember, you aren't lending or borrowing one-to-one but spread risk across a number of people. As a borrower, £500 I get might come from 25 different sources.

But I also can't help wondering about my eventual return. For one thing, this is taxed. So my hopeful 8.5 per cent will work out at 5.1 per cent net.

And so I start to think whether it'd be better simply to stick with a cash ISA. Or keep the amount set against my mortgage, where it's like getting six per cent or so tax free.

Recent advertising gives me a clue on this count. An 'advertisement feature' in London freesheet City AM leads with 'What will you do once you've reached your ISA limit?' Quite.

Of course there are plenty of us out there who don't tend to max out ISA limits every year. But I sense Zopa is quite happy to welcome those who do as lenders.

And that brings me to the matter of who is in the Zopa marketplace. The marketers tell us to 'come join Basil365, CowgirlJo, Milkmongoose' and countless others. But I'm not sure Bubbly1, trainman and Big Lender (crap names made up to protect the innocent) are worthy of my hard-earned.

We shall see. In the meantime, here's to disintermediation.