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Alternative finance, not so alternative anymore

The 4th annual report from the Cambridge Centre for Alternative Finance published this week assesses the state of alternative finance in the UK. This fintech sector is apparently set to take an increasingly important place in the economy.

Alternative finance entails peer-to-peer lending for businesses, consumers and properties, several types of crowdfunding and invoicing. The sector has witnessed a major boost in 2016, with a growth of 43% and a 50% growth in start-ups and SMEs fundings, the CCAF reports. Furthermore, the British Banking Association noted that the proportion SMEs loans emitted by peer-to-peer business lending platform is of 6,56%.

In the same fashion, equity crowdfunding rises significantly, as 17.37% of all seed and venture fundings in the UK were done using this new tool. Interesting market evolution, smaller organisations are far from being the main players in the fields, as 64% of all fundings is facilitated by the five largest platforms.

UK Alternative Finance Market Volume 2011 – 2016

Source: Entrenching Innovation, The 4th Alternative Finance Industry Report, CCAF, December 2017

These numbers announce a shift of alternative finance, from obscure new entrant in the market to  mainstream tool set to be used extensively. Bryan Zhang, Co-Founder and Executive Director, CCFA stated, “Online funding channels, such as crowdfunding and peer-to-peer lending, have not only entered common discourse, but have also become embedded in the everyday infrastructure of finance; in many instances, they are now one of the default fundraising and investments channels for businesses, retail investors and institutions.”

Read the full report here.

By Jean Leguy, Research Coordinator at Holland FinTech]]>

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