Data and Society is a think/do tank in New York City, initially funded by Microsoft and supported today by prominent organizations such as The Ford Foundation, Omidyar Network and the Bill and Melinda Gates Foundation. The team and an impressive group of Fellows (mostly faculty on sabbatical from their universities) take on the thorniest challenges in our increasingly data-driven society. Here you find lively debates on the ethics of predictive analytics, whether Facebook is a media company that should manage news feeds in the public interest, and more.

Earlier this month, the team published a paper on one of our favorite topics Peer-to-Peer Lending. It’s a comprehensive overview of how this less than 10 year old industry has evolved. All of them as originally venture-backed startups launched with promises of fast lending thanks to technology and “disintermediation,” financial inclusion for many who would not otherwise qualify, and greater transparency in the lending process. All this sounded even better in the wake of the 2008 financial crisis and regulated banks tightening credit.

The reality is a bit different. Or at least it is a different landscape today. Whereas these communities once boasted individual lenders who would pick and choose from prospective borrowers (several options exist for consumers as well as small businesses), the paper explains how “the majority of peer-­‐‑to-­‐‑peer loans are purchased by large
investors like banks, hedge funds, and wealth management firms. The promise of disintermediation, or removing the
banks from the equation, has given way to a wide array of intermediaries, including but not limited to banks.”

And what about efficiency, inclusion and transparency? Speed still characterizes lending decisions but apparently at the cost of giving many more consumers and small businesses access to capital where they had no other options and it appears that transparency is mostly a promise to the lenders, i.e., the ability to compare loan payment performance.

This is our concern–whether or not peer-to-peer lending was a model that could last, those promises were really important. We do believe that technology can deliver on them but it does require a re-imagination of the system. One that is at least a little more impervious to the return of the intermediaries.

More on that later. Meanwhile, check out Data and Society and read the paper here.