The Crowdfunding’s Industry Evolution

CrowdFundBeat News Wire,By Kostas Kotsiopoulos, Global Sales Director at Profile Software.

Since the launch of the first crowdfunding platform in Europe the industry has experienced immense changes. The financial crisis along with the new regulations created the need for alternative finance and banking models. These may well include more innovative products and banking proposals, digital media utilisation, big data management and more. The resulting regulatory fines and slowdown of the overall economy added more burden to the banking operations, making financing even more bureaucratic.

The Crowdfunding’s Industry Evolution

 

In the meantime, while banks were trying to cope with all these changes and struggling to measure and manage liquidity, crowdfunding platforms and providers were perceived as the alternative, thus increasing their share in lending to businesses and establishing the alternative finance sector.

Following over a decade since the first crowdfunding business, market demands lead to a far more “disruptive” business model, strengthened by the recent official announcement in the UK by an established crowdfunding platform provider and an innovative alternative banking organisation.

According to Business Insider in May, in an article about two startups that had recently joined forces, the following was reported: “Zopa and Metro Bank believe this partnership is a great example of how disruptive financial challengers can collaborate to provide additional value and revolutionise the UK banking sector.”

Banks are now considered “backers” for well-established P2P lending platforms with the recent example of Kabbage that raised a sum of $135m backed by ING, Santander and Scotiabank among others, proving that this is becoming a trend that creates opportunities for banks and P2P lending platforms for collaboration or even an expansion of the banking sector.

Moreover, as in any other part of the economy, China is also entering this specific area, either as a P2P lending provider or as a funder offering access to capital and to a huge market. This trend is based on both the organisations’ similarities in way of operating, with common metrics (e.g. client satisfaction, new products, regulations and compliance) and the leverage provided by existing “differentiators”, mainly  the speed and ease of delivery to the end client and the branchless, web based operations.

We possess a vast experience on P2P lending and provide all the functionality and the tools for efficiency, customer underwriting and credit checks and online marketplace. As an experienced technology provider , we introduced a robust platform for P2P lending that combined banking and  investment management functionality, enabling primary and secondary market capabilities, loan processes automation and white-labelling.

In this domain there are a number of other companies that entered with the following options:

  1. As a front-end tool performing basic online transactions and requests
  2. A crowdfunding platform that developed its own system to accommodate its needs
  3. A market-proven software platform that can accommodate current and future needs of expansion

The pros and cons of each option:

  1. It is fast and easy to use however, it lacks the capability to foster future expansion or growth opportunities. Complex business, as well as regulatory concerns, will need a banking-like platform.
  2. It has the experience of similar type of processes, however this could be a competitive type of system that it will be depend on similar type firms to develop functionality. In addition, each crowdfunding business is unique, this is actually the competitive offering for the market, so specific requirements and complex connections might not always be accommodated with ease.
  3. In this category, the crowdfunding business would need to rely on an external provider and invest in a system that is simple and cheap. It will, however, be able to perform complex and regulatory related tasks to meet with business future objectives. For this purpose, entrepreneurs would need to have a solid business plan with a crowdfunding model to develop. The benefits on selecting a tested and flexible software platform ensure ease of use, scalability and compliance that safeguard the business from future changes.

Going back to the changing trends for the banking sector, the third option also ensures better collaboration between banks and crowdfunding platforms, in both a systemic and operational way since the system is developed to provide flexibility, integration with 3rd party, compliance and more.

 

Tags: , , , , ,

HEADLINE NEWS

Forbes6th Annual Global Crowdfunding Convention Sponsored By ForbesBooksForbesIn 2012, crowdfunding raised $1.7 billion in capital – but last year, total capital raised using crowdfunding reached over $60 billion. This represents a seismic shift in the way that startups, non-profits, [...]

Forbes5 Crowdfunded Side Projects That Became Million-dollar CompaniesForbesCrowdfunding has also given many side projects a fighting chance, when no one else would. Many startups that originally launched on crowdfunding platforms have gone on to build $100 million businesses from the [...]

Will Crowdfunding Become a Big Deal in India?Knowledge@WhartonCrowdfunding — the practice of raising small amounts of capital from a large number of people to fund new ventures — is finally gaining traction in India. The question is: Will it deliver like it has in other markets? India [...]

EJ InsightHK needs crowdfunding-friendly regulatory regimeEJ InsightIn recent years, crowdfunding via the internet has taken the world financial market by storm, providing a platform for any startup with a business idea to pitch in front of a global audience of investors. And in the f [...]

MyAJC (blog)Crowdfunding site urges Georgians to run for Congress | Political ...MyAJC (blog)WASHINGTON -- New billboards popping up in greater Atlanta and Northwest Georgia this week will have a different sort of message than the typical plugs for ...and more » [...]

Now City Governments Are Crowdfunding, Too - CityLabCityLabAround the country, local governments are soliciting donations for everything from dog parks to public defenders. Is this a practical response to budget cuts or a ...and more » [...]

Some Dreamers turn to crowdfunding to pay for DACA renewalMarketplace.orgWhile the ultimate fate of DACA recipients remains unclear, thousands of young people are now rushing to renew their applications before the deadline in early October. However, the cost is $495, which may be reac [...]

Chronicle TelegramCrowdfunding account set up for business damaged in Wellington ...Chronicle TelegramMultiple fire departments battle a blaze early Sunday morning at the old birdseed factory on Depot Street in Wellington. PHOTO COURTESY MICHAEL ...and more » [...]

Model DHamtramck performance space and bar turns to crowdfunding for key renovationsModel DPlanet Ant and MEDC have launched a crowdfunding campaign to raise money to help finish and repair Planet Ant Hall. Should the crowdfunding campaign successfully raise $35,000 by Nov. 1, the MED [...]

The VergeCrowdfunding companies look to Alibaba for their next big ideaThe VergeA company called Frank wants its backers to feel good about buying into its crowdfunding campaign for a new Android phone. Its Indiegogo page is filled with videos emphasizing that the young team at Frank [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Reg Crowdfunding

CCA and the World Bank are pleased to announce the publication of Crowdfunding's Potential in the Caribbean infodev.org/infodev-files/… pic.twitter.com/iYoxhVewE0

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |