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Alternative finance set for 2015 boom

The alternative finance market is set to more than double in 2015, according to research released today.

£4.4bn is expected to be loaned via alternative financing in 2015, up from £1.7bn this year.

The report, published by Nesta and the University of Cambridge, shows the market has been doubling year on year since 2012.

Alternative finance explained

Alternative finance includes a number of new financing methods that circumvent traditional lenders, often through an online platform.

It includes peer-to-peer lending, crowdfunding, and invoice trading – industries that have been growing rapidly in recent years.

The Osborne boost

Alternative business loans got a big boost this year when George Osborne announced new legislation to aid alternative finance.

Banks will now have to refer small and medium sized businesses who are turned down finance to alternative lenders.

The announcement was seen by many as a turning point for the sector and will undoubtedly boost it substantially.

Business vs Consumer

The report showed that peer-to-peer lending is being used by both businesses and consumers.

In 2014, £749m and £547m has been lent to businesses and consumers respectively.

There are now a number of services in the market including Zopa, RateSetter, Lending Works and Funding Circle.

London’s boom

London is quickly transforming itself into the world leader for financial tech.

In his interview with Tech City News this week, eToro cofounder explained that the UK has the perfect cocktail of components to keep fintech booming:

In my opinion, the Government and regulators understand the role of new technology and have been adapting as a result of that.

It’s becoming the centre of fintech because of everything involved in the ecosystem: the UKTI, the London Stock Exchange, the Government, regulators and all the companies here.

You can read the full report here.

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