FINANCIAL SERVICES
The world of fintech has opened up a whole new world for those seeking different forms of finance . From BNPL and crossborder services to Open Banking and investment platforms , managing money has never been more flexible .
Defining alternative finance Alternative finance is a blanket term that refers to any type of financial service managed outside the parameters of the traditional banking system . These services are driven by fintech and are part of a swiftly growing network of service providers that are linked into the digital ecosystem .
Fintechs utilise the latest technologies , including AI , ML , blockchain , DL and more to deliver fast , flexible and secure services for both B2B and B2C customers .
Why has alternative finance become so popular ? In a nutshell ? Innovation and lower cost services .
Traditional banking services have failed to address demands in the marketplace for better financial service options . Incumbents have often proved to be inflexible , expensive and archaic in terms of their business and consumer offerings .
Jack Trowbridge , Commercial Director at Growth Lending , says alternative finance exists to plug the gap where SMEs have been underserved by traditional financiers . “ As the cost-of-living crisis and recent market turbulence continue to impact businesses across the country , this gap is only going to widen . The alternative finance space has a critical role to play on two fronts : accessibility and speed .”
Trowbridge points out that , “ as traditional lenders begin to pull the drawbridge up , having access to finance via alternative means is going to be critical ”. Moreover , he believes the alternative finance market has the ability to move much faster and with a more streamlined approach than traditional incumbents .
Melba Montague , Senior VP of Banking and Capital Markets for Genpact , agrees , predicting that as the global economic slowdown continues , customers will increasingly choose alternative finance solutions . “ With rising inflation and costs of living , the current economic climate is anticipated to worsen over the coming months . As cash and disposable income become tighter , we will see increasingly more people turn to non-bank loans as a means of alternative finance , with BNPL models expected to feature prominently .”
“ THE ALTERNATIVE FINANCE SPACE HAS A CRITICAL ROLE TO PLAY ON TWO FRONTS : ACCESSIBILITY AND SPEED ”
JACK TROWBRIDGE COMMERCIAL DIRECTOR , GROWTH LENDING
But , she points out , the BNPL industry is unregulated , decentralised , and brings risk to consumers borrowing beyond their means without adequate financial advice .
She continues : “ Arguably , BNPL has made it easier to create debt , and it needs to be tackled as more structured regulatory models become developed . As such , it ' s critical that banks educate the consumer to avoid exacerbating an already fragile cost-of-living crisis .” fintechmagazine . com 69