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Launched just 18 months ago, Zopa has grown to over 130,000 members and is now on the brink of entering the US market. The concept is based on people who have spare cash lending to members who need to borrow money, meaning that you pay interest - at a lower rate than through a traditional loan scheme - to individuals rather than a bank.

The idea has certainly caught on, winning Internet Innovation of the Year at the 2006 CNet Technology awards and described by American magazine Business 2.0 as one of the 11 most disruptive companies in the world. Independent comparison site The Motley Fool seems to be a fan, claiming that "British banks must be getting seriously worried about Zopa's success".

The company is "quite a big alternative to the high street banks", according to David Kuo, head of personal finance at Fool.co.uk. "You will almost certainly get a better rate of interest, simply because you are taking on the risk and cutting out the middle man. And in the case of Zopa, in terms of people borrowing money, I think it is a great way to raise plenty by borrowing little from lots of people."

Undoubtedly Zopa has made a successful entry into the market, and it's not the only innovation to enter the banking sector in recent years, with several internet-based banks jostling to take care of consumers' savings. So how did this fledgling company go about taking on the corporate big boys?

Basically, the guys behind Zopa invested a lot of time and effort into researching business ideas. James Alexander, the company's UK CEO, revealed: "There was a group of three of us that were all working for Egg - developing the Egg cards, savings accounts and all that kind of stuff. We left Egg at around about the same time - and we had nothing to do!"

The entrepreneurs decided that they should work together on a project and "ended up sitting in a barn in Hertfordshire at the home of a guy called Richard Duvall, who founded Egg", and Mr Alexander freely admits that at that time the concept for Zopa hadn't even been born.

"We decided that what we wanted to do was to create a company, but we had no ideas," he revealed. "We spent two years working with two different groups of researchers to get a view of what the world might be like in the future…We thought that if we could do that, it would be much easier to come up with a new idea and a new company."

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There is always an element of risk when embarking upon a new enterprise, but for the Zopa team that gamble has certainly paid off. "People are saying, 'Great! If I am going to pay interest, I would much rather pay interest back to an individual than I would to make the banks even wealthier than they currently are'. For some people that is the motivation," said Mr Alexander.

In addition, people can actually see that they are helping someone while making money, and that can be very rewarding. "Although you aren't able to see someone's name and address, you can see that you are lending to a guy who is 25, living in west Cornwall who is using the money to do some home improvements," the CEO revealed. "You can also see a message that they might have written back. It is very human. You are not only getting a great financial deal - you are also getting some sense of social reward."

And that, in many people's opinion, is one of the most obvious trends among new businesses these days - to offer a service which provides some kind of social or ethical reward.

Writing in the Ethical Careers Guide, business guru Heather Wilkinson said that running an ethical business can not only make you feel good, but can also give you an advantage over your competitors. "Ethical awareness is on the consumer agenda, and individuals are increasingly showing a loyalty to brands that are in tune with their own beliefs," she wrote. In addition, a company's reputation can have a significant impact on its credibility. "The consistency of behaviour and ethical commitments [is] vital to keep people buying your product or service."

Figures from the 2006 GEM Social Entrepreneurship Monitor suggest that the social enterprise sector now accounts for around five per cent of the UK's economy, with a combined turnover of some £27 billion. Speaking at a panel discussion and networking reception at the British Library in January, John Bird, founder and editor-in-chief of the Big Issue, urged people to turn towards social enterprise. Describing it as "a business response to a social crisis", he said that the return from giving through business was "a matter of shared equity, shared ownership and shared vision".

It may sound like a load of huggy-feely nonsense - but the fact is, it's big business. Certainly it has worked for Zopa which, 18 months into its existence, is going from strength to strength.

Mr Alexander said: "From our lenders' perspective, it is going really well. From a company perspective, we are just getting ready to launch in the US. We are also looking to launch in other overseas markets as well. It is going really well."

The advent of the internet has meant that the traditional dominance of the high street can no longer be taken for granted. And although the social lending concept is now no longer a novel idea, there is always room for competition. As Motley Fool's David Kuo said, Zopa may well have first mover advantage - "but there is no reason why it might not expand into more competition".

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This article was first published on Simply Business.