Panel
London Summit 2015 - Innovative Finance: Solving SMEs Capital Access Dilemma (I)
- Banks are expected to potentially resume retrenchment from small business lending based on limited indications, though their 80% market share in lending is predicted to become more balanced as the sector diversifies in the next few years.
- OnDeck plans to expand its lending operations into Australia very shortly, while other platforms anticipate banks will increasingly view partnership as a complementary opportunity to lower the high cost of serving small business loans.
- Regulatory bodies face challenges in creating consistent rules for evolving peer-to-peer and innovative business models, with expectations that the UK's balanced approach will be adopted in Europe, whereas the US risks introducing overly complex retention rules.
- Small business owners' online data imprints are projected to facilitate more unbiased credit assessments, and entrepreneurs are expected to eventually bypass intermediaries to raise finance directly via mobile technology.
- Angel investing is anticipated to expand from the top 1% of wealth holders to the top 20%, significantly increasing capital availability, while fees in traditional public markets and broker models are predicted to become unsustainable.
- Investors are expected to receive value from "mini successes" rather than relying solely on exits, and platforms maintaining transparency will likely encourage more open signaling of risk concerns before potential crises occur.
- The equity crowdfunding sector is expected to require strict compliance and demonstrated viability through actual returns over the next few years, though innovative finance is projected to cease being viewed as "alternative" within five years.
- Companies may progress by "dipping in and out" of various platforms, moving from equity rounds to debt platforms like Funding Circle once trading history is established, while banks may lend into the innovative finance space directly.
- Future growth in mobile finance and white-label platforms is anticipated over the next five years, with "really clever" companies gaining the ability to self-select debt or equity financing through direct audience engagement.