funding4business – technology shocks coming for Ausssie banking
The Murray Financial Inquiry of 2014 into Australia’s financial systems has predicted that technology changes and market disruptors using new technologies will have the largest influence on changing the banking system in Australia, as we know it.
At the forefront of this change is the emergence of peer-to-peer crowdfunding in Australia.
Charles Moldow, General Partner, Foundation Capital in the USA, in a recent report titled “A Trillion Dollar Market by the People, for the People”, claims that “peer-to-peer marketplace lending will over the next few years, remake banking as we know it”.
Today technology and innovation are making possible a new generation of financial services that are more affordable and more available. That’s why Moldow, believes that “marketplace lending” will evolve to be a trillion dollar “market by the people, for the people”.
Foundation Capital predicts that by 2025 $1 trillion in loans will be originated in this manner globally.
The peer-to-peer crowdfunding industry rose to prominence in the USA & UK during the onset of the Global Financial Crisis in 2008, plugging a hole left by the reluctance of cash-strapped banks to lend to small businesses.
Consequently it has created an opportunity for non-traditional lenders through peer-to-peer platforms to cater to the growing demand for alternative business financing options and directly connecting borrowers and investors
For the first time in banking, the online marketplace makes it possible for a third party to match financial supply and demand. As a result, lenders and borrowers can now find one another and agree to loan terms, all without the involvement of retail banks or credit card companies.
The San Francisco based LendingClub Corp, one of the USA’s largest operators in the online peer-to-peer marketplace, has facilitated more than US$5 billion in loans since its launch during the GFC in 2007. This shift to a peer-to-peer crowdfunding is not unique to the USA.
The major UK networks providing these investment options include, Funding Circle, CrowdCube, Zopa and RebuildingSociety. Funding Circle alone has facilitated over GBP400 million in business loans in the UK over the four years since establishment.
See Charles Moldow’s complete Foundation Capital report here:- www.foundationcapital.com/downloads /foundationcap_marketplacelendingwhitepaper.pdf