Outlook from Singapore, India, China and other countries show that firms are opening up to this
April 16, 2015: Alternative finance is a landmark shift from institutional trust to peer trust. Disruption is democratising capital allocation by untethering financing from centralised, one-stop shops. This unbundling of services is leading to the creation of online marketplaces.
Some alternative finance firms are adopting a less direct approach, opting to work with traditional lenders who offer an existing footprint of customers. Traditional lenders are still an important channel, as the internet is not convenient for every customer and established brands factor in the customer’s choice of lender.
In late 2014, ApexPeak conducted a survey on alternative finance in Asia Pacific. Perspectives from P2P lenders, crowdfunders and firms providing cash advances were gathered to assess how alternative finance will change business and personal lending. ApexPeak eases cash-flow problems faced by SMEs and MNCs by buying e-invoices before they fall due.
Singapore outlook
Working through existing channels has been a key growth strategy for MatchMove Pay. The P2P lender allows a white label of their platform by known brands from e-commerce, banking, airlines, and restaurant chains. Customers top up cards via ATM, bank transfer or over-the-counter payments at convenience stores.
Shaleish Naik, co-founder and CEO of MatchMove Pay, says their P2P lending platform complements traditional lenders. ‘Our platform enables companies to issue their own branded virtual and plastic cards to anyone with a mobile phone. The cards are powered by Amex, Visa, and Mastercard, and can be used anywhere online or in-store,’ says Naik.
Hong Kong outlook
Advanced Merchant Payments (AMP) provide short-term unsecured financial loans to underserved small businesses via a fast application process with minimal paperwork. The loans are repaid via convenient automated daily repayments directly from the business bank account. AMP also enables banks and non-bank financial institutions to profitably deploy loans to their small-business customers directly.
‘We serve loans to hundreds of different types of businesses, including general and specialist retail, restaurants, bars, doctors, dentists, salons and e-commerce merchants,’ says James Lloyd, Head of Strategy and Corporate Development, Advanced Merchant Payments.
China outlook
‘China is our biggest growth market, raising over US$2 million since our launch in April 2014,’ says Alan Crabbe, co-founder, Pozible, a crowdfunding platform and community-building tool for creative projects and ideas.
In Asia Pacific, China is the most active market, with over six hundred P2P lenders. When Chinese banks tightened lending in 2013, the number of P2P lenders exploded. According to a report by Grant Thornton1 , crowdfunding platforms in China made up 28 per cent of global deal flow between 2011 and 2013.
Speaking to ApexPeak on the rapid growth in China, Peter Baeck, principal researcher for Nesta, said: ‘One of the drivers of alternative finance in the UK (in particular, P2P lending) was the scarcity of available traditional lending. For many businesses, alternative financing was the alternative. However, findings from our recent 2014 study of the UK alternative finance market found a growing number of businesses and individuals who could have got a traditional loan, but sought alternative finance instead, because they consider alternative finance a better, faster and more flexible deal.’
India outlook
‘i-Lend have a mission to provide credit access to all sections of the urban working population,’ says Niti Gupta, co-founder and Head of Operations, i-Lend, a P2P lending platform that connects borrowers in need of money with investors who are ready to invest.
The adoption of alternative finance in India has been similar to that in China. Both nations have a large numbers of SMEs and individuals without access to traditional lending. India’s access to private money is not only opaque; it is expensive.
Rajat Gandhi, founder and CEO of P2P lending platform Faircent, said: ‘India has a consumer loan market of nearly $155 billion as per RBI.’ Faircent provides loans to both individuals and businesses.
1. Grant Thornton. Alternative Lending: A regulatory approach to Peer-to-Peer lending, 2014.
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