MoneyPlace and RateSetter say they are working on similar deals. These "marketplace" lenders need to do get as many lenders and borrowers on their platforms as possible because this improves "liquidity", leading to better rates for borrowers. "A lot of mutual lenders have local, community lending in their DNA – people lending to people, so with marketplace lenders we are in a sense reconnecting these local community lenders to each other or, at a vertical level, a particular trade, job type or a sector, can lend to each other," Mr Symons said. "What you see is there are younger people who tend to need credit for life events like getting married, buying cars, getting a house and equally there are older members of the community who are net savers who could lend money." G&C has also just started offering home loans tailored to individuals' credit scores. This is known as risk-based pricing. It is linking its offers to SocietyOne affiliated web site getcreditscore, which offers credit scores from credit bureau Veda Group for free. Under 30s highest number of applicants

G&C Mutual chief executive Dave Taylor, however, said the move is more about marketing to young people who are using the getcreditscore site. G&C has loaned about $2 million via SocietyOne (the site won't disclose how much in total has been loaned) over the past seven months. M&C has handed out more in personal loans directly in that time but Mr Taylor said he expects the amounts loaned via SocietyOne to quickly grow into the tens of millions of dollars and the big plus for it is that its borrowers are younger. "We have seen the demographics – the proportion of applicants under 30 is way higher than our normal channels," he told The Australian Financial Review. As well as lending to a new generation that doesn't care much about the personal touch pitch from credit unions, SocietyOne allows the banks to improve their profits by boosting their unsecured loans and diversify risk due to the ability to choose specific types of borrowers in precise geographic locations. MoneyPlace founder Stuart Stoyan, an ex NAB banker, said it also has several "partnerships" it is negotiating. These include becoming a financier for retailers' customers, where it would compete alongside credit cards, "interest free" loans and consumer leases.

"The difference is we are a P2P lender not a balance sheet lender. If I am a balance sheet lender I am asking 'what price will the customer take?'. Our revenue model is different, it relies on fees, which means we can provide a better offer to a customer at the point of sale," he said. SocietyOne at present can only accept "sophisticated investors" but it is applying for a retail credit licence from ASIC. The only P2P lender able to accept retail lenders at the moment is RateSetter, which has had $220 million in loan applications so far, with $10 million loaned. But SocietyOne also lets investors make working capital loans to stock and station agents via a deal with Ray White. Mr Symons said it wants to offer lenders more small business borrowers as well as become a direct substitute for a credit cards via other distribution partners outside of banks. Deals boost net margins The biggest credit union in the country, CUA, has said it is also looking to do deals with P2P lenders to boost net interest margins above 2 per cent.

Others are unconvinced the value they would get from investing in P2P will justify the cost. Peter Evers, the chief executive of People's Choice Credit Union – second in size to CUA – said it had kept a healthy personal loan book at about $500 million out of a total loan book of $6.6 billion, and maintains a better total net interest margin as a result on 2.3 per cent. He does not see an adequate return on investment from P2P and he doesn't use mortgage brokers for the same reason. He argues P2P lenders play the same middleman role as brokers in personal loans. However, Mr Evers said it would reconsider if it was paid a referral fee as part of any deal. "There is a lot of piloting and probing [between established and P2P lenders] and we are watching with interest but we are not just lending money for a revenue stream – it is to gain a relationship with a borrower," he said. "We think P2P is similar to brokers, they will want to own the relationship."