DOCSLIB.ORG

3.5 Credit Scoring

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
3.5 Credit Scoring This is an electronic reprint of the original article. This reprint may differ from the original in pagination and typographic detail. Predicting Credit Risk Levels in Online Peer to Peer Lending Using Neural Network Byanjankar, Ajay Published: 01/01/2015 Link to publication Please cite the original version: Byanjankar, A. (2015). Predicting Credit Risk Levels in Online Peer to Peer Lending Using Neural Network. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. Take down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. This document is downloaded from the Research Information Portal of ÅAU: 01. Oct. 2021 Ajay Byanjankar Predicting Credit Risk Levels in Online Peer to Peer Lending Using Neural Network Master’s Thesis in Information Systems Supervisors: Doc. Jozsef Mezei Dr. Markku Heikkilä Faculty of Social Sciences, Business and Economics Åbo Akademi University Åbo 2015 ABSTRACT Author Ajay Byanjankar Title Predicting Credit Risk Levels in Online Peer to Peer Lending Using Neural Network Faculty School of Business and Economics Major Digital and Mobile Business Year 2015 Master's Thesis Åbo Akademi University 78 pages, 14 figures, 21 tables, 1 appendix Keywords P2P Lending, Credit Risk, Data Mining, Neural Network, Credit Scoring Peer to peer lending is growing rapidly, providing an alternative to traditional banking. The purpose of the thesis is to study the credit risk in peer to peer lending. The thesis attempts to predict the credit risk of borrowers to support lenders in selecting profitable borrowers. The data for the research is collected from a European peer to peer lending company, Bondora. Data mining techniques are used for the research process. Artificial neural network is applied in the study to study the borrowers' behaviour from the historical loan data for predicting default probability of borrowers. A feed forward back propagation neural network is employed for constructing a credit score model. The model classifies the borrowers into predefined groups of default or non default, providing lenders helpful information on selecting loan applications. Furthermore, the model identifies the variables that have higher influence on determining the default probability of borrowers. Neural network was more effective in constructing the credit score model compared to logistic regression. The results of the study were successful in providing practical guidance to lenders in selecting a new investment. Table of Contents 1 INTRODUCTION ..................................................................................................... 1 1.1 Peer to Peer platforms and markets ............................................................... 3 1.2 Research Objectives and Research Questions ............................................... 6 2 PEER TO PEER LENDING ...................................................................................... 9 2.1 Peer to Peer Lending Process ........................................................................ 10 2.2 Benefits and Challenges of Peer to Peer Lending ........................................ 12 2.3 Bondora ........................................................................................................... 13 3 LITERATURE REVIEW ........................................................................................ 17 3.1 Previous Studies in Peer to Peer Lending .................................................... 17 3.2 Previous studies on applying neural networks in building a credit score . 19 3.3 Neural Networks ............................................................................................. 21 3.4 Application of Neural Networks in Credit Risk Evaluation ....................... 25 3.5 Credit Scoring ................................................................................................. 25 3.6 Credit risk in peer to peer lending ................................................................ 27 3.7 Summary to Findings from Literature Review ........................................... 29 4 RESEARCH METHODS ........................................................................................ 31 4.1 Research Process ............................................................................................ 32 4.2 Data and Data Preparation ........................................................................... 34 4.2.1 Data ..................................................................................................................... 34 4.2.2 Data Preparation ................................................................................................ 40 5 DEVELOPING THE MODEL ................................................................................ 46 5.1 Choosing the Neural Network Topology ...................................................... 47 5.2 Choosing the Threshold Value ...................................................................... 50 6 RESULTS AND DISCUSSION .............................................................................. 53 6.1 Results .............................................................................................................. 53 6.2 Discussion ........................................................................................................ 57 6.3 Suggestions ...................................................................................................... 59 7 CONCLUSION ........................................................................................................ 62 7.1 Summary ......................................................................................................... 62 7.2 Limitations and Further Research ............................................................... 63 REFERENCES ................................................................................................................ 65 APPENDIX.....................................................................................................................72 List of Figures Fig 1: General statistics of Bondora................................................................................14 Fig 2: Loan Distribution of Bondora...............................................................................15 Fig 3 : Loan volume and number of users.......................................................................16 Fig 4: A simplified Neural Network................................................................................22 Fig 5: Neural Network Process........................................................................................24 Fig 6: Research Process...................................................................................................33 Fig: 7 Age Distribution of Borrowers..............................................................................36 Fig 8: Nationality of Borrowers......................................................................................36 Fig 9: Risk Categories of Borrowers...............................................................................37 Fig 10: Loan purposes of Borrowers...............................................................................38 Fig 11: Marital Status of Borrower.................................................................................38 Fig 12: Loan defaults in Risk Categories........................................................................39 Fig 13: Neural Network Topology..................................................................................48 Fig 14: Relative Importance of the Variables .................................................................54 List of Tables Table 1: The 12 Most Important European P2P Companies...........................................4 Table 2: P2P Lending volumes in December 2014..........................................................5 Table 3: Loan Description of Borrowers........................................................................39 Table 4: Proposed variables for Credit Scoring Model..................................................42 Table 5: Correlation of the numeric variables.................................................................43 Table 6 : Final Input Variables........................................................................................44 Table 7 : Data partition summary....................................................................................47 Table 8 : AUC value with different number of nodes in hidden layer..........................49 Table 9: Classification with threshold value 0.5.............................................................50 Table 10: Classification with threshold value 0.2...........................................................51 Table 11: Classification with threshold value 0.1...........................................................51 Table 12: Classification with threshold value 0.15.........................................................51 Table 13: Classification with threshold value 0.16.........................................................51 Table 14: Classification Results......................................................................................53
Load more

Recommended publications
  • East Africa Crowdfunding Landscape Study
    REPORT | OCTOBER 2016 East Africa Crowdfunding Landscape Study REDUCING POVERTY THROUGH FINANCIAL SECTOR DEVELOPMENT Seven Things We Learned 1 2 3 4 East African East Africa’s Crowdfunding There’s appetite to crowdfunding platforms report risks and the do business and to markets are on promising regulatory learn more from the move. progress. environment. across East Africa. Crowdfunding platforms Since 2012 M-Changa In Kenya, for example, Over 65 participants at- (donation, rewards, debt has raised $900,000 Section 12A of the Capi- tended the Indaba & and equity) raised $37.2 through 46,000 tal Markets Act provides a Marketplace from all cor- million in 2015 in Kenya, donations to 6,129 safe space for innovations ners of the East African Rwanda, Tanzania and fundraisers. Pesa Zetu to grow before being sub- market. Uganda. By the end of Q1 and LelaFund are also ject to the full regulatory 2016, this figure reached opening access to their regime. $17.8 million – a 170% deals on the platform. year-on-year increase. 5 6 7 East Africa’s MSMEs ex- There are both commercial Global crowdfunding press a demand for alterna- and development oppor- markets are growing tive finance, but they’re not tunities for crowdfunding fast but also evolving. always investment-ready or platforms in East Africa. Finance raised by crowdfunding able to locate financiers. Crowdfunding platforms have the platforms worldwide increased from 45% of Kenyan start-ups sampled re- potential to mobilise and allocate $2.7 billion in 2012 to an estimated quire between $10,000 and $50,000 capital more cheaply and quickly $34 billion in 2015.
    [Show full text]
  • How Financial Technologies Are Revolutionizing the Financial Industry
    HOW FINANCIAL TECHNOLOGIES ARE REVOLUTIONIZING THE FINANCIAL INDUSTRY Lucie Duval Dissertation submitted as partial requirement for the conferral of Master in Finance Supervisor: António Freitas Miguel, Assistant Professor of Finance, Department of Finance, ISCTE Business School September 2016 NIZING THE THE FINANCIAL NIZING INDUSTRY Lucie Duval LOGIES ARE LOGIESREVOLUTIO ARE HOW FINANCIALTECHNO Abstract Financial technologies (fintech) have known an incredible exposure over the last years, attracting investments of large billions of dollars. Fintech can be seen as the match between finance and technology and they are imposing a way of thinking in all the branches of the financial industry. The main aim of this dissertation is to study how the financial technologies are revolutionizing the financial industry. After the financial crisis of 2008, customers have changed their ways of seeing “Finance” and, more particularly, “Banks”, looking for products and services responding to their needs. Moreover, the financial crisis has highlighted a relevant number of dysfunctions of the banking sector and on the financial regulation. Regulators have strengthened their requirements for banks, particularly in their relations with clients. These have opened a breach for Fintech companies and they are using it. Fintech companies rely on a different value proposition to clients that is based on a timesaving, fast and clear experience. Indeed they are proposing majors innovation in products and also in the processes. Fintech companies have put the customer back at the center of all their attention; customer becomes again the top priority. Financial technologies have already revolutionized the finance industry even if their impact on the market, for the moment may still be seen as trivial.
    [Show full text]
  • Pushing Boundaries: the 2015 UK Alternative Finance Industry Report
    PUSHING BOUNDARIES THE 2015 UK ALTERNATIVE FINANCE INDUSTRY REPORT February 2016 Bryan Zhang, Peter Baeck, Tania Ziegler, Jonathan Bone and Kieran Garvey In partnership with with the support of CONTENTS Forewords 04 Introduction 10 About this study 12 The Size and Growth of the UK Online Alternative 13 Finance Market Market Size and Growth by Alternative Financing 14 Models Increasing Share of the Market for Business Funding 19 Market Trends in Alternative Finance 22 Expanding Base of Funders and Fundraisers 23 Market Entrants and Partnership strategies 25 Seeking Growth Through Awareness, Increased 26 Marketing and Forging Partnerships 27 Institutionalisation of the Market Cross-Border Transactions and Internationalisation 30 The Geography and Industries & Sectors of 31 Alternative Finance Industry Perspectives on Regulation, Tax Incentives 33 and Risks Size and Growth of the Different Online 38 Alternative Finance Models Peer-to-Peer Business Lending 39 Peer-to-Peer Business Lending (Real Estate) 40 Peer-to-Peer Consumer Lending 41 Invoice Trading 42 Equity-based Crowdfunding 43 Equity-based Crowdfunding (Real Estate) 44 Reward-based Crowdfunding 45 Community Shares 46 Donation-based Crowdfunding 46 Pension-led Funding 47 Debt-based Securities 47 Conclusion 48 Acknowledgements 50 Endnotes 51 3 ABOUT THE AUTHORS BRYAN ZHANG Bryan Zhang is a Director of the Cambridge Centre for Alternative Finance and a Research Fellow at the Cambridge Judge Business School. He has co-authored !ve industry reports on alternative !nance. PETER BAECK Peter Baeck is a researcher at Nesta, where he focuses on crowdfunding, peer-to-peer lending and the role of digital technologies in public and social innovation.
    [Show full text]
  • Raising Finance for Europe's Small & Medium-Sized Businesses
    Raising finance for Europe’s small & medium-sized businesses A practical guide to obtaining loan, bond and equity funding Association for Financial Markets in Europe www.afme.eu Disclaimer This guide should not be relied upon as legal, financial, regulatory or other professional advice. Users of the guide are encouraged to seek appropriate independent advice before entering into any kind of financing transaction. While the information contained in this is taken from sources believed to be reliable, AFME does not represent or warrant that it is accurate or complete and AFME and its employees and consultants shall not have any liability arising from, or relating to, Septemberthe use of this guide 2015 or its contents. Raising finance for Europe’s small & medium-sized businesses Page ii Contents Foreword 2 1. Introduction 4 2. What type of finance? 6 3. Choices for loan finance 7 3.1 Bank and non-bank loans 7 3.2 Leasing / equipment finance 12 3.3 Invoice financing 12 3.4 Trade finance 13 3.5 Peer-to-peer lending and crowdfunding 15 4. Bond issues for larger SMEs 17 5. Raising equity 20 5.1 Family and friends 20 5.2 Equity crowdfunding 20 5.3 Business angels 21 5.4 Venture capital and private equity 22 5.5 Going public: equity listing requirements, process and timeline 24 6. Pan-European and government SME support schemes 28 6.1 Pan-European programmes 28 6.2 Information on national development banks 30 Appendix 1: Useful links for SMEs 34 Appendix 2: Overview of pan-European and national SME assistance programmes 38 Appendix 3: Stock exchange requirements for equities and bonds 42 Appendix 4: Database: Sizing of SME loan and equity markets 44 Contacts 48 Raising finance for Europe’s small & medium-sized businesses Page 1 Foreword Foreword On behalf of AFME, I am delighted to introduce this guide, which provides practical information to SMEs across Europe on how to raise finance from a variety of sources.
    [Show full text]
  • 2018 FINTECH100 Leading Global Fintech Innovators 2017 FINTECH100
    2018 FINTECH100 Leading Global Fintech Innovators 2017 FINTECH100 Leadin loba Fintec nnovators 1 1 2016 2017 Fintech100 Report FINTECH100 Leadin loba Fintec nnovators Company #00 1 | Fintech Innovators 2016 1 2015 Fintech100 Report FINTECH 100 Leading Global “ Fintech Innovators Report 2015 Company Description At a Glance Tag Line Located Year Founded Key People Website Specialisation Staff Enabler or Disruptor Key Investors Ownership Size User Engagement $ $ $ $ $ The 100 Leading Fintech Innovators Report 2016 Fintech100 Report The 50 Best Fintech Innovators Report 2014 Fintech100 Report 2 About the List The Fintech100 is a collaborative effort between H2 Ventures and KPMG. In its fifth year, the Fintech100 uncovers and evaluates the most innovative Fintech companies globally. The Fintech100 comprises a ‘Top 50’ and an ‘Emerging 50’ and highlights those companies globally that are taking advantage of technology and driving disruption within the financial services industry. A judging panel comprised of senior partners from H2 Ventures and KPMG has decided the final composition of the Fintech100 list. H2 Ventures H2 Ventures is a global thought leader in fintech venture capital investment. Founded by brothers Ben and Toby Heap, and based in Sydney, Australia, it invests alongside entrepreneurs and other investors in early stage fintech ventures. H2 Ventures is the manager of the H2 Accelerator – Australia’s only dedicated fintech accelerator – and operates out of Sydney’s dynamic Startup Hub. Twitter @H2_Ventures LinkedIn H2 Ventures Facebook H2 Ventures KPMG Global Fintech The financial services industry is transforming with the emergence of innovative, new products, channels and business models. This wave of disruption is primarily driven by evolving customer expectations, digitalisation, as well as continued regulatory and cost pressures.
    [Show full text]
  • Peer-To-Peer Lending Annual Report 2019
    PEER-TO-PEER LENDING STATE OF THE MARKET ANNUAL REPORT 2019 | WWW.ALTFI.COM UK MARKETPLACE ONLINE LENDING RETURNS IN THE FINTEX LISTED DIRECT ADVERTISED IMPAIRMENTS LENDING IN EUROPE REALITY WAY LENDING RETURNS AND DEFAULTS We follow the trends so you can stay ahead of them. P2: We are specialist advisers in the AlternativeRSM Finance space. At RSM, we make it our priority to understand your business so youADVERT can make confident decisions about the future. Experience the power of being understood. Experience RSM | rsmuk.com The UK group of companies and LLPs trading as RSM is a member of the RSM network. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm each of which practises in its own right. The RSM network is not itself a separate legal entity of any description in any jurisdiction. The RSM network is administered by RSM International Limited, a company registered in England and Wales (company number 4040598) whose registered office is at 50 Cannon Street, London EC4N 6JJ. The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug. 3 INTRODUCTION PEER-TO-PEER LENDING: STATE OF THE UK MARKET After rapid growth from the ashes of the financial crisis, the alternative finance sector appears to be maturing. However, it faces internal and external challenges that will dictate the industry’s long-term viability and success.
    [Show full text]
  • Marketplace Lending a Temporary Phenomenon? Foreword 1
    Marketplace lending A temporary phenomenon? Foreword 1 Executive summary 2 1. What is marketplace lending? 4 2. Marketplace lending: a disruptive threat or a sustaining innovation? 8 3. The relative economics of marketplace lenders vs banks 11 4. The user experience of marketplace lenders vs banks 23 5. Marketplace lending as an asset class 24 6. The future of marketplace lending 30 7. How should incumbents respond? 32 Conclusion 35 Appendix 36 Endnotes 37 Contacts 40 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is the United Kingdom member firm of DTTL. This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication. © 2016 Deloitte LLP. All rights reserved. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom.
    [Show full text]
  • A Case of Regulatory Evolution
    Forum A CASE OF REGULATORY successful integration of sector regulation, alongside continued government support for alternative finance. EVOLUTION – A REVIEW OF While many member states have opted for a “wait and THE UK FINANCIAL CONDUCT see” approach to crowdfunding regulation, the United Kingdom was of the first nations to create bespoke reg- AUTHORITY’S APPROacH TO ulation for crowdfunding activities. As the regulating CROWDFUNDING body that monitors and supervises crowdfunding ac- tivities in the UK is the Financial Conduct Authority (FCA)2, this article will centre on the regulatory regime that it has adopted. ROBERT WarDROP AND 1 The FCA defines crowdfunding as an umbrella term to TANIA ZIEGLER capture various “categories” of activity, some of which are regulated whilst others are not. The general defini- Introduction tion of crowdfunding, according to the FCA is “an inter- net-based business model […] in which people and busi- Across Europe, crowdfunding is quickly moving from a nesses (including start-ups) can try to raise money from fringe funding instrument to becoming a mainstream fi- the public, to support a business, project, campaign or nance channel, connecting “crowds” to fund businesses, individual” (FCA 2016a). This broad term includes four projects and individuals. In its recently published Report sub-categories: on Crowdfunding in the EU Capital Markets Union, the European Commission details the importance of crowd- • Donation-based crowdfunding: people give funding as “an important source of non-bank financing money to enterprises or organisations whose activi- in support of job creation, economic growth and com- ties they want to support. petitiveness” (European Commission 2016).
    [Show full text]
  • IDC Finance Technology Conference 20 Ekim 2016
    FinTech İstanbul Platformu Prof. Dr. Selim YAZICI Co-Founder FinTech Istanbul @SelimYazici IDC Finance Technology Conference 20 Ekim 2016 Nedir bu FinTech? Girişimcilik dünyasında 2014 yılından beri en çok duyulan kelime: “FinTech” Bankacılık Sigortacılık “Finansal HİZMET” sağlamak için “TEKNOLOJİ” kullanımı ! Aracı Kurumlar FinTech Neden Gündemde? Finans dünyasına, dijitalleşme ile çözüm: “Yeniden Yapılanma” Dijital kanallardan anında; hızlı esnek bireysel çözümler sunar FinTech Neden Gündemde? “Dijital Dönüşüm” Dijital kanallardan anında; hızlı esnek bireysel çözümler sunar FinTech Finansal Hizmetler Dünyasını Yeniden Şekillendirecek “Korkunun Ecele Faydası Yok” • Önümüzdeki 5 yıl içinde global FinTech yatırımlarının 150 Milyar USD’yi aşması bekleniyor. • FinTech’ler %100 müşteri odaklı • Müşterinin çektiği acıyı biliyorlar • Yeni iş modelleri ile yeni ürün ve hizmetleri getiriyorlar • FinTech Startupları geleneksel şirketlerin işlerini tehdit edebilir • Blockchain Teknolojisi çok şeyi değiştirecek Çözüm: “Rekaberlik” Dünyada FinTech Sadece Aralık 2015’de 81 FinTech girişimi 1 milyar USD yatırım aldı. 894 224 Sadece Google, son 5 yılda 37 farklı FinTech 2010 2011 2012 2013 2014 2015 yatırımı yaptı Son 5 yılda FinTech odaklı girişim sermayesi (VC) sayısı Dünyada FinTech Yatırımları DEsignED BY POWERED BY PIERRE DREUX Fintech Landscape Banking & Payment (356) Investments (108) Financing (196) Insurance (82) Banking (54) P2P Lending (49) Banking Personal Finance Investment P&C Reinsurance (6) Platforms Mobile Virtual Banking (9) - Expense
    [Show full text]
  • Fintech Credit: Market Structure, Business Models and Financial
    22 May 2017 FinTech credit Market structure, business models and financial stability implications Report prepared by a Working Group established by the Committee on the Global Financial System (CGFS) and the Financial Stability Board (FSB) This publication is available on the website of the BIS (www.bis.org) and the FSB (www.fsb.org). To contact the BIS Media and Public Relations team, please e-mail [email protected]. You can sign up for e- mail alerts at http://www.bis.org/emailalerts.htm. To contact the FSB, please e-mail [email protected]. You can sign up for e-mail alerts at www.fsb.org/emailalert or follow the FSB on Twitter: @FinStbBoard. © Bank for International Settlements and Financial Stability Board 2017. All rights reserved. Brief excerpts may be reproduced or translated provided the source is stated. ISBN 978-92-9259-051-2 (online) ii Preface FinTech credit – that is, credit activity facilitated by electronic platforms such as peer-to-peer lenders – has generated significant interest in financial markets, among policymakers and from the broader public. Yet there is significant uncertainty as to how FinTech credit markets will develop and how they will affect the nature of credit provision and the traditional banking sector. Against this background, a group of representatives from the membership of the Committee on the Global Financial System (CGFS) and the Financial Stability Board (FSB) Financial Innovation Network, together with the Secretariats of the CGFS and FSB, undertook this study of FinTech credit. The study draws on public sources and ongoing work in member institutions to analyse the functioning of FinTech credit markets, including the size, growth and nature of activities.
    [Show full text]
  • Pushing Boundaries
    PUSHING BOUNDARIES THE 2015 UK ALTERNATIVE FINANCE INDUSTRY REPORT February 2016 Bryan Zhang, Peter Baeck, Tania Ziegler, Jonathan Bone and Kieran Garvey In partnership with with the support of CONTENTS Forewords 04 Introduction 10 About this study 12 The Size and Growth of the UK Online Alternative 13 Finance Market Market Size and Growth by Alternative Financing 14 Models Increasing Share of the Market for Business Funding 19 Market Trends in Alternative Finance 22 Expanding Base of Funders and Fundraisers 23 Market Entrants and Partnership strategies 25 Seeking Growth Through Awareness, Increased 26 Marketing and Forging Partnerships 27 Institutionalisation of the Market Cross-Border Transactions and Internationalisation 30 The Geography and Industries & Sectors of 31 Alternative Finance Industry Perspectives on Regulation, Tax Incentives 33 and Risks Size and Growth of the Different Online 38 Alternative Finance Models Peer-to-Peer Business Lending 39 Peer-to-Peer Business Lending (Real Estate) 40 Peer-to-Peer Consumer Lending 41 Invoice Trading 42 Equity-based Crowdfunding 43 Equity-based Crowdfunding (Real Estate) 44 Reward-based Crowdfunding 45 Community Shares 46 Donation-based Crowdfunding 46 Pension-led Funding 47 Debt-based Securities 47 Conclusion 48 Acknowledgements 50 Endnotes 51 ABOUT THE AUTHORS BRYAN ZHANG Bryan Zhang is a Director of the Cambridge Centre for Alternative Finance and a Research Fellow at the Cambridge Judge Business School. He has co-authored five industry reports on alternative finance. PETER BAECK Peter Baeck is a researcher at Nesta, where he focuses on crowdfunding, peer-to-peer lending and the role of digital technologies in public and social innovation.
    [Show full text]
  • The Daring Dozen
    present The Daring Dozen dar·ing adjective 1. (of a person or action) adventurous or audaciously bold. synonyms: bold, audacious, adventurous, intrepid, venturesome, fearless, brave, unafraid, unshrinking, undaunted, dauntless, valiant, valorous, heroic, dashing. 2. Stands a good chance of changing the financial world! Forewords I first started writing about the Alternative Finance space over five years ago for the Financial Times, observing the emergence of pioneers such as Zopa here in the UK. At the time I thought there was a huge opportunity here for investors and borrowers to work out a way of sidestepping the big banks, called disintermediation in the technical jargon. What I didn't realise was just how audacious this disruptive technology would prove to be, i.e how literally every bit of the financial spectrum could, arguably, be disintermediated using new technologies and clever marketing. In my naive way I thought we'd probably stop at fund raising for consumer loans and perhaps SME loans/equity. Little did I realise that once the fuse was lit, virtually every financial product was suddenly up for grabs. This special report highlights the sheer scale of disruptive innovation sweeping through the UK and Europe with a whole legion of platforms now attacking every niche imaginable. My sense is that we're at the tipping point of something really quite big. These new products and platforms are numerous and growing in number by the week BUT to date the amount of money that's been invested is still (in the great schema of things) quite small at just over £1 billion according to our internal data.
    [Show full text]