Peer-to-peer lending investment will be eligible for an Innovative Finance ISA from 2016.
In comparison, the alternative finance markets in France and Germany reached €154m and €140m respectively in 2014.Īlternative 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. For the United Kingdom, according to the University of Cambridge and Nesta, the UK online alternative finance market reached £1.74bn in 2014. For instance, the European online alternative finance market is estimated to have reached nearly €3bn in 2014, and is projected to reach €7bn in 2015. Īlternative 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. Alternative finance differs to traditional banking or capital market finance through technology-enabled 'disintermediation', which means utilising third party capital by connecting fundraisers directly with funders, in turn, reducing transactional costs and improve market efficiency. Īlternative finance instruments include cryptocurrencies such as Bitcoin, SME mini-bond, social impact bond, community shares, private placement and other ' shadow banking' mechanisms. 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. ( January 2021) ( Learn how and when to remove this template message)Īlternative finance refers to financial channels, processes, and instruments that have emerged outside of the traditional finance system, such as regulated banks and capital markets. Please help improve it to make it understandable to non-experts, without removing the technical details. This article may be too technical for most readers to understand.
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