Finance:Alternative finance

From HandWiki

Alternative finance refers to financial channels, processes, and instruments that have emerged outside of the traditional finance system, such as regulated banks and capital markets.[1] Examples of alternative financing activities through 'online marketplaces' are reward-based crowdfunding, equity crowdfunding, revenue-based financing, online lenders, peer-to-peer consumer and business lending, and invoice trading third party payment platforms.[2]

Alternative finance instruments include cryptocurrencies such as Bitcoin, SME mini-bond, social impact bond, community shares, private placement and other 'shadow banking' mechanisms. Alternative finance differs to traditional banking or capital market finance through technology-enabled 'disintermediation',[3] which means utilising third party capital by connecting fundraisers directly with funders, in turn, reducing transactional costs and improve market efficiency.[4]

Alternative finance has grown into a considerable global industry in recent years following the financial crisis, according to various reports, particularly for small and medium enterprises.[5][6] For instance, the European online alternative finance market is estimated to have reached nearly €3bn in 2014,[7] and is projected to reach €7bn in 2015.[8] For the United Kingdom, according to the University of Cambridge and Nesta, the UK online alternative finance market reached £1.74bn in 2014.[9] In comparison, the alternative finance markets in France and Germany reached €154m[10] and €140m[11] respectively in 2014.

Alternative finance activities such as equity crowdfunding and peer-to-peer lending are now regulated by the Financial Conduct Authority in the United Kingdom from 1 April 2014.[12] Peer-to-peer lending investment will be eligible for an Innovative Finance ISA from 2016.[13] In the US, under the Title II of the JOBS Act, accredited investors are allowed to invest on equity crowdfunding platforms from September 2013.[14] The SEC then announced the updated and expanded Regulation A mandated by the Title IV of the JOBS Act to allow non-accredited investors to participate in equity crowdfunding.[15]

Financial health platform on alternative finance that can give a transparent and detailed picture of the financial situation of anyone using bank transaction data which can accelerates the way for decision-making by providing precise credit scoring based on financial history, these platforms in Europe empowered by PSD2.

See also

References

  1. ↑ "Cambridge Judge Business School: Cambridge Centre for Alternative Finance". Jbs.cam.ac.uk. https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/. 
  2. ↑ "The Rise of Future Finance". Nesta.org.uk. https://www.nesta.org.uk/sites/default/files/the_rise_of_future_finance.pdf. 
  3. ↑ Crowdfunding: Disintermediated Investment Banking by Brian J. Rubinton :: SSRN. Papers.ssrn.com. doi:10.2139/ssrn.1807204. https://mpra.ub.uni-muenchen.de/31649/1/MPRA_paper_31649.pdf. 
  4. ↑ "The Future of Financial Services". Weforum.org. http://www3.weforum.org/docs/WEF_The_future__of_financial_services.pdf. 
  5. ↑ "Ripe for the picking : A guide to alternative sources of finance". Cbi.org.uk. http://www.cbi.org.uk/media/2072014/cbi_alternative_finance_guide_for_growing_businesses_embargoed_0001_200513.pdf. 
  6. ↑ "Global insights from regional Alternative Finance studies". https://home.kpmg/content/dam/kpmg/uk/pdf/2016/10/global-alternative-finance-report-web.pdf. 
  7. ↑ Harriet Agnew (2015-02-23). "European market for online alternative finance surges". FT.com. http://www.ft.com/cms/s/0/5c61bfca-baad-11e4-8447-00144feab7de.html#axzz3gkPjyYtU. 
  8. ↑ "Moving Mainstream". Jbs.cam.ac.uk. http://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2015-uk-alternative-finance-benchmarking-report.pdf. 
  9. ↑ "Understanding Alternative Finance". Nesta.org.uk. https://www.nesta.org.uk/sites/default/files/understanding-alternative-finance-2014.pdf. 
  10. ↑ "Crowdfunding in Deutschland wenig verbreitet - SPIEGEL ONLINE". Spiegel.de. 2015-02-20. http://www.spiegel.de/spiegel/vorab/crowdfunding-in-deutschland-wenig-verbreitet-a-1019642.html. 
  11. ↑ "L'essor du prêt en ligne booste la finance participative en Europe". Lemonde.fr. 2015-02-23. http://www.lemonde.fr/argent/article/2015/02/23/l-essor-du-pret-en-ligne-booste-la-finance-participative-en-europe_4581641_1657007.html. 
  12. ↑ "A review of the regulatory regime for crowdfunding and the promotion of non-readily realisable securities by other media". Fca.org.uk. http://www.fca.org.uk/static/documents/crowdfunding-review.pdf. 
  13. ↑ "Including peer-to-peer lending in the new innovative finance Isa will provide boost for millions of Brits | City A.M". City A.M.. 2015-07-09. http://www.cityam.com/219835/including-peer-peer-loans-new-nnovative-finance-isa-will-provide-boost-millions-brits. 
  14. ↑ "Jumpstart Our Business Startups (JOBS) Act". SEC.gov. https://www.sec.gov/spotlight/jobs-act.shtml. 
  15. ↑ "SEC Adopts Rules to Facilitate Smaller Companies' Access to Capital". SEC.gov. 2015-03-25. https://www.sec.gov/news/pressrelease/2015-49.html. 



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