Say 'financial innovation' and what comes to mind for many is the investment banks and complex products that were at the centre of the financial crisis. Yet in recent years we’ve seen the term become associated with a new type of finance provider, those businesses and online platforms gathering under the banner of alternative finance.
Finance models such as crowdfunding and peer-to-peer lending are at the heart of this as they harness internet technologies to bring those with money and those who need it closer together and aggregate numerous small investments or donations to meet large funding needs. Businesses, community groups and individuals are using this industry to either get funding they cannot access elsewhere or to get it quicker and on better terms.
Nesta has been at the forefront of research in this space as it has grown and are pleased to continue this with our newest report ‘Understanding Alternative Finance’. This research, conducted in partnership with the University of Cambridge with support from the ACCA and PwC, constitutes the most detailed and extensive survey of the alternative finance sector yet undertaken anywhere in the world. As part of the work, we have gathered the views of the general public as well as those who have used the industry to access or commit funds as well as analysed platform data to gain insights on how the industry works, its size and growth.
We are extremely grateful to the industry for being such willing collaborators on this research and hope that this report will be an aid to those trying to understand how this space works as well as be a stepping stone for further exploration of the industry.
Below we present some of the headline findings from the research. As ever, we welcome your comments and views.