Alternative finance refers to financial channels, processes, and instruments emerging outside traditional financial systems such as regulated banks and capital markets. Examples of alternative funding activities through 'online market' are crowdfunding prize-based, equity crowdfunding, customer lending and peer-to-peer businesses, third party payment platform trading invoices. Alternative financial instruments include cryptocurrencies such as Bitcoin, SME mini-bonds, social impact bonds, community shares, personal placements and other 'shadow banking' mechanisms. Alternative financing is different from traditional banking or capital market financing through technology-supported "disintermediation", which means capitalizing on third-party capital by linking direct fundraising with funders, in turn, reducing transaction costs and increasing market efficiency.
Alternative finance has grown into a sizable global industry in recent years following the financial crisis according to various reports, especially for small and medium-sized businesses. For example, Europe's online alternative financial markets are estimated to have reached nearly EUR3bn by 2014 and are projected to reach EUR7bn by 2015. For the United Kingdom, according to the University of Cambridge and Nesta, Britain's online alternative financing market reaches Ã, £ 1.74bn by 2014 For comparison, alternative financial markets in France and Germany reach EUR154m and EUR140m ​​â € <â € Alternative financial activities such as equity crowdfunding and peer-to-peer lending are now regulated by the Financial Conduct Authority in the United Kingdom starting April 1, 2014. Inter-partner loan investments will qualify for ISA Innovative Financing from 2016. In the US, under Title II of the Act -And JOBS, an accredited investor is allowed to invest on the equity crowdfunding platform starting September 2013. The SEC then announces the updated and expanded Regulation A mandated by Title IV of the JOBS Act to allow unaccredited investors to participate in the equity crowdfunding. Video Alternative finance
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Source of the article : Wikipedia
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