Alternative_Finance
Alternative finance refers to financial channels, processes, and instruments that have emerged outside of the traditional finance system, such as regulated banks and capital markets.[1] 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.[2]
 | This article may be too technical for most readers to understand. (January 2021) |
Alternative finance instruments include cryptocurrencies such as Bitcoin, SME mini-bond, social impact bond, community shares, private placement and other 'shadow banking' mechanisms. Alternative finance differs to traditional banking or capital market finance through technology-enabled 'disintermediation',[3] which means utilising third party capital by connecting fundraisers directly with funders, in turn, reducing transactional costs and improve market efficiency.[4]
Alternative 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.[5][6] For instance, the European online alternative finance market is estimated to have reached nearly €3bn in 2014,[7] and is projected to reach €7bn in 2015.[8] For the United Kingdom, according to the University of Cambridge and Nesta, the UK online alternative finance market reached £1.74bn in 2014.[9] In comparison, the alternative finance markets in France and Germany reached €154m[10] and €140m[11] respectively in 2014.
Alternative 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.[12] Peer-to-peer lending investment will be eligible for an Innovative Finance ISA from 2016.[13] In the US, under the Title II of the JOBS Act, accredited investors are allowed to invest on equity crowdfunding platforms from September 2013.[14] The SEC then announced the updated and expanded Regulation A mandated by the Title IV of the JOBS Act to allow non-accredited investors to participate in equity crowdfunding.[15]
Financial health platform on alternative finance that can give a transparent and detailed picture of the financial situation of anyone using bank transaction data which can accelerates the way for decision-making by providing precise credit scoring based on financial history, these platforms in Europe empowered by PSD2.