The fintech space is exploding in popularity and alternative financing — a 21st century solution to traditional credit — is blossoming alongside it.
A recent report from the Economist Intelligence Unit reveals that more than $25 billion has been invested into fintech companies over the past half-decade, making it the most popular destination for venture funding. And many of those investors are backing some of AltFi’s most disruptive players, like Upstart and Prosper.
What got us here
Out of control lending in the traditional banking space is one factor that got us to this point. An overabundance of subprime mortgage loans, concealed by high home prices and buoyed by securitization, were a chief driver of the last Financial Crisis. As a result, U.S. regulators were forced to enact an array of new regulations to ensure lenders wouldn’t threaten the country’s financial system again.
In the aftermath, new regulations placed on the financial markets included Dodd-Frank, Basel III, Basel II/II.5 and the Card Act.
These bills have also stifled traditional banks’ appetite to lend, and the stats are clear: Since 2009, the total amount of revolving credit in the U.S. has declined by nearly $1 trillion. Between 2008 and 2012, traditional small business lending in the U.S. fell by a whopping $120 billion.
According to Mercator Advisory Group analyst Alex Johnson, another reason customers are flocking to alternative lenders has to do with technology. “In my research, I found that the answer is less a matter of pricing (as many assume) and more about providing the fast, digital-centric borrowing experiences that today’s consumers want,” he explains in a blog post.
AltFi customers appreciate the transparency of the borrowing process, the hands-on control they have over the process and the ease and speed of using the technology involved.
Lower rates: A third factor
A third factor boosting the AltFi space has…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
