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While social or peer-to-peer lending isn’t new (in Internet time), what is new is the recognition Zopa received this month as the world’s “most threatening non-bank competitor.”

Amidst the steady stream of stories about the worsening credit crunch and tightening lending standards, Zopa’s style of social or peer-to-peer (P2P) lending stands as a virtual beacon for beleaguered borrowers and serves as a potential investment alternative for would-be P2P consumers-turned- lenders. Traditional banks beware!

Zopa, Virgin Money, Lending Club and Prosper.com are probably among the more well-known entities offering P2P lending sites linking consumers who want to lend money to ordinary people who need money, but who don’t want to deal with a bank or credit card company to do so.

As reported in USA Today, consumers-turned-lenders can use the sites to evaluate whether to lend money to a particular borrower — and at what rate — based on the borrower’s credit score, existing debt, as well as social factors, like how compelling the borrower’s reason is for a loan or whether he or she shares similar interests.

According to Bank Marketing News, what makes Zopa different and popular is the fact that is has partnered with U.S. Credit Unions to offer guaranteed and insured investments via CDs. A consumer who wants to turn lender simply funds a CD through a Zopa-partner credit union, picks an interest rate, selects a Zopa borrower to help, and presto! (Zopa!) – that “help” then comes in the form of lowering the borrower’s monthly loan payment. The lower the lender’s chosen CD rate, the more Zopa funds are earmarked for the borrower.

It appears our credit crunch is helping accelerate growth of these alternative-lending sites. Bank Marketing says that Zopa has 200,000 customers, and cites an Online Banking Report that $100 million of P2P loans will be issued in 2008, and grow to $9 billion by 2017.

At a time when traditional and online banks are fighting for deposits and customers, social lending no doubt better show up on banks’ competitive radars. If not, they may find themselves playing out a scene from a LendingTree.com TV commercial, where a banker tells her co-worker that she got a better offer from competitor LendingTree.com. “But you work for our bank,” replies the shunned and stunned loan officer. “I know,” replies the banker-turned-borrower.