Alternative Finance in Europe Reaches €5.4b with 92% Growth
- Research by the Cambridge Centre for Alternative Finance shows impressive growth in the sector across the continent.
This article was written by Alessandro Ravanetti, the co-founder and CMO of Crowd Valley, a global Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to supply a technological service that not only simplifies but also aids consumers, business operators, and networks.This is done by optimizing business processes and financial operations through the implementation of specialized software, algorithms, and automated computing processes. Transitioning from the roots of the financial sector, fintech providers can be found through a multitude of industries such as retail banking, education, cryptocurrencies, insurance, nonprofit, and more. While fintechs cover a vast array of business sectors, it can be broken down into four classifications which are as followed: Business-to-business for banks, Business-to-business for banking business clients, business-to-consumers for small businesses, and consumers. More recently, fintechs presence has become increasingly apparent within the trading sector, primarily for cryptocurrencies and blockchain technology.The creation and use of Bitcoin can also be contributed to innovations brought upon by fintechs while smart contracts through blockchain technology have simplified and automated contracts between buyers and sellers. As a whole, fintechs applications are growing more diverse with a consumer-centric focus while its applications continue to innovate the trading and cryptocurrency sectors through automated technologies and business practices. Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to supply a technological service that not only simplifies but also aids consumers, business operators, and networks.This is done by optimizing business processes and financial operations through the implementation of specialized software, algorithms, and automated computing processes. Transitioning from the roots of the financial sector, fintech providers can be found through a multitude of industries such as retail banking, education, cryptocurrencies, insurance, nonprofit, and more. While fintechs cover a vast array of business sectors, it can be broken down into four classifications which are as followed: Business-to-business for banks, Business-to-business for banking business clients, business-to-consumers for small businesses, and consumers. More recently, fintechs presence has become increasingly apparent within the trading sector, primarily for cryptocurrencies and blockchain technology.The creation and use of Bitcoin can also be contributed to innovations brought upon by fintechs while smart contracts through blockchain technology have simplified and automated contracts between buyers and sellers. As a whole, fintechs applications are growing more diverse with a consumer-centric focus while its applications continue to innovate the trading and cryptocurrency sectors through automated technologies and business practices. Read this Term company.
The alternative finance industry in Europe continues to grow at impressive pace.
According to a new report entitled “Sustaining Momentum”, prepared by the Cambridge Centre for Alternative Finance (CCAF) of the University of Cambridge Judge Business School, which tracks and benchmarks the development and growth of P2P lending and Crowdfunding Crowdfunding Crowdfunding is defined as funding of a project via raising smaller denominations of money across a large body of number of people.New businesses that need access to more capital may also conduct crowdfunding. Generally, crowdfunding is performed through an online community, social media, or crowdfunding websites such as Kickstarter, GoFundMe, and RocketHub. Depending upon which jurisdiction an investor resides within will dictate the sort of restrictions that are applied to the crowdfunding process. This determines how much can be invested or which new business may receive the contributions. These restrictions are established to help shield investors from the high risk of losing their investment.Like any other investment, there is a risk of new businesses failing and are similar to those used in hedge fund trading. Why Crowdfunding is Becoming More PopularOne form of crowdfunding that’s becoming more popular would be equity-based crowdfunding, where new businesses can raise capital without losing control to venture capital investors. Crowdfunding has gradually become much more popular and mainstream over the past decade. Private businesses receive much larger amounts of liquidity that is generated by having several or tens of thousands of investors. More shareholders generally correlate to a larger market which in turn creates more liquidity which is what investors seek out when considering equity-based crowdfunding.Both entrepreneurs and investors can significantly benefit from crowdfunding while regulations are continuing to place an increasing role in protecting investor capital.The Securities and Exchange Commission (SEC) is the entity responsible for regulating equity-based crowdfunding in the United States although crowdfunding did not pick up traction until 2011 after President Obama signed the JOBS Act. Crowdfunding is defined as funding of a project via raising smaller denominations of money across a large body of number of people.New businesses that need access to more capital may also conduct crowdfunding. Generally, crowdfunding is performed through an online community, social media, or crowdfunding websites such as Kickstarter, GoFundMe, and RocketHub. Depending upon which jurisdiction an investor resides within will dictate the sort of restrictions that are applied to the crowdfunding process. This determines how much can be invested or which new business may receive the contributions. These restrictions are established to help shield investors from the high risk of losing their investment.Like any other investment, there is a risk of new businesses failing and are similar to those used in hedge fund trading. Why Crowdfunding is Becoming More PopularOne form of crowdfunding that’s becoming more popular would be equity-based crowdfunding, where new businesses can raise capital without losing control to venture capital investors. Crowdfunding has gradually become much more popular and mainstream over the past decade. Private businesses receive much larger amounts of liquidity that is generated by having several or tens of thousands of investors. More shareholders generally correlate to a larger market which in turn creates more liquidity which is what investors seek out when considering equity-based crowdfunding.Both entrepreneurs and investors can significantly benefit from crowdfunding while regulations are continuing to place an increasing role in protecting investor capital.The Securities and Exchange Commission (SEC) is the entity responsible for regulating equity-based crowdfunding in the United States although crowdfunding did not pick up traction until 2011 after President Obama signed the JOBS Act. Read this Term in Europe, the online alternative finance market grew by 92% year on year, reaching €5.4 billion in 2015.
This is the second report prepared by the CCAF, following the one published in February 2015, called “Moving Mainstream - The European Alternative Finance Benchmarking Report”.
The research, which covers an estimated 90% of the visible market, was prepared with the help of 17 major European industry associations and research partners, in partnership with KPMG and with the support of the CME Group Foundation.
The UK remains the biggest and most important market in the area - with the €4.4 billion reached in 2015, it represents 81% of the market share in Europe. France is now the second country by market volume for online alternative finance in Europe, totalling €319 million, followed by Germany with €249 million and the Netherlands with €111 million.
A few additional key findings emerging from the report:
- No shock to see the UK in first position, even by looking at the alternative finance volume per capita of €45.88. What’s more surprising is that Estonia is in the second position with €24 and Finland with €12 per capita.
- P2P consumer lending is the largest market segment for alternative finance in Europe, with €366 million reached in 2015, and it’s followed by P2P business lending with €212 million and equity-based crowdfunding with €159 million (93% increase year on year).
- Invoice trading is the market segment growing more rapidly, having increased more than 11 times from the year, from €7 million in 2014 to €81 million in 2015.
- More institutional players stepped in, with 44% of the platforms surveyed (excluding the UK) disclosing institutional funding in 2015.
- A total of 9,442 businesses (excluding the UK), considering both startups and SMEs, raised funding via online alternative finance models, for a total of €536 million.
- 82% of consumer loans, 78% of traded invoices and 38% of business loans are funded with automatic bidding or selection on digital platforms.
- The average deal size on alternative finance platforms is growing. €459,00 for equity crowdfunding, just below €100,000 for P2P business loans, and under €10,000 for P2P consumer loans.
- The difference in perceptions regarding the current national regulations is substantial. 38% of the platforms think that regulations are adequate, 28% think that they are excessive, while 10% think that the regulations are too relaxed.
Taking the whole picture into consideration, these numbers look really impressive and similar to what we have seen in the first part of the year with the considerable flows of investments going into the fintech sector at a global level. From this report we can see a vast number of indicators that tell us once again that the finance industry is reinventing itself at a very fast pace.
More details about the state of alternative finance in Europe, with the possibility to download the report for free, from this link.
This article was written by Alessandro Ravanetti, the co-founder and CMO of Crowd Valley, a global Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to supply a technological service that not only simplifies but also aids consumers, business operators, and networks.This is done by optimizing business processes and financial operations through the implementation of specialized software, algorithms, and automated computing processes. Transitioning from the roots of the financial sector, fintech providers can be found through a multitude of industries such as retail banking, education, cryptocurrencies, insurance, nonprofit, and more. While fintechs cover a vast array of business sectors, it can be broken down into four classifications which are as followed: Business-to-business for banks, Business-to-business for banking business clients, business-to-consumers for small businesses, and consumers. More recently, fintechs presence has become increasingly apparent within the trading sector, primarily for cryptocurrencies and blockchain technology.The creation and use of Bitcoin can also be contributed to innovations brought upon by fintechs while smart contracts through blockchain technology have simplified and automated contracts between buyers and sellers. As a whole, fintechs applications are growing more diverse with a consumer-centric focus while its applications continue to innovate the trading and cryptocurrency sectors through automated technologies and business practices. Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to supply a technological service that not only simplifies but also aids consumers, business operators, and networks.This is done by optimizing business processes and financial operations through the implementation of specialized software, algorithms, and automated computing processes. Transitioning from the roots of the financial sector, fintech providers can be found through a multitude of industries such as retail banking, education, cryptocurrencies, insurance, nonprofit, and more. While fintechs cover a vast array of business sectors, it can be broken down into four classifications which are as followed: Business-to-business for banks, Business-to-business for banking business clients, business-to-consumers for small businesses, and consumers. More recently, fintechs presence has become increasingly apparent within the trading sector, primarily for cryptocurrencies and blockchain technology.The creation and use of Bitcoin can also be contributed to innovations brought upon by fintechs while smart contracts through blockchain technology have simplified and automated contracts between buyers and sellers. As a whole, fintechs applications are growing more diverse with a consumer-centric focus while its applications continue to innovate the trading and cryptocurrency sectors through automated technologies and business practices. Read this Term company.
The alternative finance industry in Europe continues to grow at impressive pace.
According to a new report entitled “Sustaining Momentum”, prepared by the Cambridge Centre for Alternative Finance (CCAF) of the University of Cambridge Judge Business School, which tracks and benchmarks the development and growth of P2P lending and Crowdfunding Crowdfunding Crowdfunding is defined as funding of a project via raising smaller denominations of money across a large body of number of people.New businesses that need access to more capital may also conduct crowdfunding. Generally, crowdfunding is performed through an online community, social media, or crowdfunding websites such as Kickstarter, GoFundMe, and RocketHub. Depending upon which jurisdiction an investor resides within will dictate the sort of restrictions that are applied to the crowdfunding process. This determines how much can be invested or which new business may receive the contributions. These restrictions are established to help shield investors from the high risk of losing their investment.Like any other investment, there is a risk of new businesses failing and are similar to those used in hedge fund trading. Why Crowdfunding is Becoming More PopularOne form of crowdfunding that’s becoming more popular would be equity-based crowdfunding, where new businesses can raise capital without losing control to venture capital investors. Crowdfunding has gradually become much more popular and mainstream over the past decade. Private businesses receive much larger amounts of liquidity that is generated by having several or tens of thousands of investors. More shareholders generally correlate to a larger market which in turn creates more liquidity which is what investors seek out when considering equity-based crowdfunding.Both entrepreneurs and investors can significantly benefit from crowdfunding while regulations are continuing to place an increasing role in protecting investor capital.The Securities and Exchange Commission (SEC) is the entity responsible for regulating equity-based crowdfunding in the United States although crowdfunding did not pick up traction until 2011 after President Obama signed the JOBS Act. Crowdfunding is defined as funding of a project via raising smaller denominations of money across a large body of number of people.New businesses that need access to more capital may also conduct crowdfunding. Generally, crowdfunding is performed through an online community, social media, or crowdfunding websites such as Kickstarter, GoFundMe, and RocketHub. Depending upon which jurisdiction an investor resides within will dictate the sort of restrictions that are applied to the crowdfunding process. This determines how much can be invested or which new business may receive the contributions. These restrictions are established to help shield investors from the high risk of losing their investment.Like any other investment, there is a risk of new businesses failing and are similar to those used in hedge fund trading. Why Crowdfunding is Becoming More PopularOne form of crowdfunding that’s becoming more popular would be equity-based crowdfunding, where new businesses can raise capital without losing control to venture capital investors. Crowdfunding has gradually become much more popular and mainstream over the past decade. Private businesses receive much larger amounts of liquidity that is generated by having several or tens of thousands of investors. More shareholders generally correlate to a larger market which in turn creates more liquidity which is what investors seek out when considering equity-based crowdfunding.Both entrepreneurs and investors can significantly benefit from crowdfunding while regulations are continuing to place an increasing role in protecting investor capital.The Securities and Exchange Commission (SEC) is the entity responsible for regulating equity-based crowdfunding in the United States although crowdfunding did not pick up traction until 2011 after President Obama signed the JOBS Act. Read this Term in Europe, the online alternative finance market grew by 92% year on year, reaching €5.4 billion in 2015.
This is the second report prepared by the CCAF, following the one published in February 2015, called “Moving Mainstream - The European Alternative Finance Benchmarking Report”.
The research, which covers an estimated 90% of the visible market, was prepared with the help of 17 major European industry associations and research partners, in partnership with KPMG and with the support of the CME Group Foundation.
The UK remains the biggest and most important market in the area - with the €4.4 billion reached in 2015, it represents 81% of the market share in Europe. France is now the second country by market volume for online alternative finance in Europe, totalling €319 million, followed by Germany with €249 million and the Netherlands with €111 million.
A few additional key findings emerging from the report:
- No shock to see the UK in first position, even by looking at the alternative finance volume per capita of €45.88. What’s more surprising is that Estonia is in the second position with €24 and Finland with €12 per capita.
- P2P consumer lending is the largest market segment for alternative finance in Europe, with €366 million reached in 2015, and it’s followed by P2P business lending with €212 million and equity-based crowdfunding with €159 million (93% increase year on year).
- Invoice trading is the market segment growing more rapidly, having increased more than 11 times from the year, from €7 million in 2014 to €81 million in 2015.
- More institutional players stepped in, with 44% of the platforms surveyed (excluding the UK) disclosing institutional funding in 2015.
- A total of 9,442 businesses (excluding the UK), considering both startups and SMEs, raised funding via online alternative finance models, for a total of €536 million.
- 82% of consumer loans, 78% of traded invoices and 38% of business loans are funded with automatic bidding or selection on digital platforms.
- The average deal size on alternative finance platforms is growing. €459,00 for equity crowdfunding, just below €100,000 for P2P business loans, and under €10,000 for P2P consumer loans.
- The difference in perceptions regarding the current national regulations is substantial. 38% of the platforms think that regulations are adequate, 28% think that they are excessive, while 10% think that the regulations are too relaxed.
Taking the whole picture into consideration, these numbers look really impressive and similar to what we have seen in the first part of the year with the considerable flows of investments going into the fintech sector at a global level. From this report we can see a vast number of indicators that tell us once again that the finance industry is reinventing itself at a very fast pace.
More details about the state of alternative finance in Europe, with the possibility to download the report for free, from this link.