Alternative Finance: first ever in-depth analysis of Alternative Finance

21
Nov

The world’s first in depth study of Alternative Finance focuses on the UK’s fast growing sector and its challenges. The NESTA (national Endowments for Science, Technology, and the Arts) and University of Cambridge  survey defines Alternative Finance, its markets, growth patterns and barriers to adoption. Above all, it looks at  why we and the banks should care. Here we  give an overview  and then look at Peer-to-Peer (P2P) lending for Small and Medium Enterprises (SMEs), Alternative Finance’s biggest sector.

44 facts about Alternative Finance in the UK

Highlights from the 2014 UK Alternative Finance industry report

44 Facts about Alternative Finance in the UK

Overview of Alternative Finance

The end of 2014 will see the Alternative Finance market’s growth to £1.74 billion,  a drop in the bucket for the £1.2 trillion of  bank retail deposits. Accenture’s 2014 report estimates that Alternative Finance will take 30% of the retail banking revenues by 2020.1. At its core Alternative Finance funds businesses and individuals outside of traditional banking:

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Examples of different types of Alternative Finance outlets.

Alternative Finance’s Biggest Player: P2P Business Lending

P2P Business lending is the latest and major player in the current Alternative Finance market.

Alternative Finance includes P2P, crowdfunding and other types.

Each type of market in Alternative Finance and their growth.

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The average size of a single business lender portfolio is typically £8000 with  an average of 52 different business loans in their portfolio.

Socio-Economic Impact of Alternative Finance for P2P business

There are two key socio-economic impacts for business borrowers from Alternative Finance funding. First, accessibility and secondly, improvement in jobs and turnover. In the UK 7000 SMEs and 80,000 personal borrowers have received Alternative Finance funding. A third of business borrowers received funding when they would not have from other sources. The majority of P2P business borrowers have seen an increase in employment, turnover and profit/net income.

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Percentage of P2P Business borrowers who would have received funding from other outlets.

Future Growth of Alternative Finance

The emerging Alternative Finance market faces the treble challenges of  being unknown and unused by many businesses and only by a  single demographic of high-income men. Only 44% of the SMEs surveyed had heard of any Alternative Finance outlets, and only 9% had actually used it. The limited demographic is common in the finance culture, but  innovation and education could expand the market to include more women, younger investors and lower income groups.

Want to take action about Alternative Finance?

 

Find out how China is embracing P2P from our video

Read the full report here

Follow Funding Circle’s blog from the UK’s largest P2P for business lending

Compare the latest P2P lending rates here

Find out about how the UK’s P2P companies work together in the Peer2Peer Finance Association to ensure industry standards

Attend microfinance and P2P events of the UK Microfinance Club in London

Invest in micro-entrepreneurs in developing countries with Lend With Care’s P2P platform

 

1The Everyday Bank: A New Vision for the Digital Age. Accenture. http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-The-Everyday-Bank-A-New-Vision-for-the-Digital-Age.pdf