In the last decade, we have witnessed rapid growth in the alternative lending space, with the creation of new business models opening up the range of alternative lending products available.

Two key factors have driven this growth.

Firstly, the credit squeeze which followed the global financial crisis of 2008 highlighted the lack of options for borrowers who were forced to seek different sources of credit.

Once this process started, the gradual return of the banks to lending was not sufficient to restrict these new methods. In effect, a process of disintermediating the banks began.

Secondly, the advance of new technology has enabled new ways of connecting borrowers and lenders and fuelled this process of disintermediation.

The rise of big data and artificial intelligence enables efficient and extremely accurate risk-profiling processes, therefore democratising a core competency that the banks traditionally held as their own.

The route to obtaining a loan has traditionally been via the banks, which have been able to dominate the market due to their access to low-cost funding via deposits.

Read here to know more:

https://e27.co/the-case-for-alternative-lending-20190728/