Dec 10, 2018 Sean Albert
Since the Great Recession, alternative financial services have been on a tear, and this is true for a wealth of segments including credit scoring, small business lending and short term financing. As necessity always acts as the mother of invention, the extreme need among consumers and companies - especially entrepreneurial firms - following the financial collapse ushered in a new era of competition among creditors and similar entities.
This has appeared to not quite reach the tipping point yet, though, as plenty of research has indicated that the alternative financial services market is still growing and rising in prominence both in the United States and abroad. In the coming years, it will be interesting to see how these industries play out, as well as what types of competition-based improvements users will begin to enjoy resulting from cross-sector rivalries.
A call for eased restrictions
ValueWalk recently reported that the Alternative Investment Management Association has argued for increased de-regulation of non-bank lenders and used a survey to back its assertion. According to the news provider, the AIMA essentially believes that alternative lending is actually less risky than traditional bank loans, and thinks that this should be cause for more level compliance requirements and restrictions between the two industries.
"Asset managers are not banks and therefore need a different regulatory approach. Indeed, what most managers to the survey indicated is not a demand for a different approach to asset management regulation but a simple need to dismantle regulatory and tax barriers to direct lending by non-banks," ValueWalk quoted from the researchers.
Furthermore, the source noted that the AIMA believes that further de-regulation of alternative lenders might also improve prospects for traditional banks, as partnerships between the two entities could potentially be advantageous for all involved. More research will likely be needed before regulators shift gears, but this did act as a provocative argument.
Regulations might not be that restrictive
Research and Markets recently released the results of its latest study, U.S. Tech Platform Based Alternative Lending Market Report 2015, which found that this industry is thriving regardless of what types of challenges might be in play. Consider this - the firm forecasts the total volume of loans disbursed by these alternative lenders to hit $5.2 billion next year, which is more than double the figure recorded in 2014.
The advantages of leveraging alternative financial services continue to grow, and chances are competition will only work to improve prospects for businesses and consumers in the future.