‘Alternative Finance’ - positive handle or ball and chain? The results are in

Does the ‘Alternative’ in Alternative Finance help or hinder this rapidly expanding sector?

Could it be growing at an even greater rate if the word ‘Alternative’ was dropped?

These are the questions we explored in our recent poll.

We wanted to find out whether people believe that Alternative Finance is a ‘positive handle’ or a ‘ball and chain’ for the sector.

The idea behind the poll came from a blog post we published on our site in September, which looked at the rapid rise of Alternative Finance and the types of finance that are now being labelled ‘Alternative’.

For example, are products such as invoice finance and asset finance really ‘alternative’? After all, they were around long before the financial crisis of 2008 when the term ‘Alternative’ first began being used in association with peer-to-peer lending and crowdfunding.

As well as understanding whether respondents believe Alternative Finance has positive or negative connotations, we also wanted to establish whether there was a difference in opinion between those in the finance industry and those outside of it.

Here’s what we found:

Finance industry respondents

• 78% of the respondents in the survey were members of the finance industry.
• Of the 78%,73% believed Alternative Finance to be a positive handle
• 23% believed it to be a ball and chain

Outside the Finance Industry

• 22% of the respondents in the survey were members from outside the finance industry.
• Of the 22%,82% believe Alternative Finance to be a positive handle
• Whereas 18% believed it to be a ball and chain

These results clearly show positive sentiments towards the term, both inside and outside of the finance industry. In total, 74% consider Alternative Finance to be a positive handle, against 26%who see it as a ball and chain.

In the poll, we also invited respondents to expand on their feelings. Here’s what some of them had to say:

Of those with reservations, as Toby Lanyon of Trade River (UK) Ltd explains, this isn’t necessarily because it isn’t traditional bank funding in its own right. Toby uses the term "non-bank" to describe his offering to SMEs, highlighting a shift in the way SMEs see traditional lenders.

James Levy, who comments a lot on FinTech matters was unreserved in his opinion that it was harmful. He prefers the term 'marketplace lending'.

We even had some representatives from overseas platforms contributing to the debate, like Leo Tyndall, CEO of MarketLend in Australia.  Leo also voted 'ball and chain' saying:

Conclusion

While it has its doubters, the support for the term Alternative Finance clearly stems from a desire to be seen as something different to ‘traditional’ lenders, namely banks that, for many, became the antithesis of all that is good in financial services.

Of course, it is not only funding that is undergoing change. Alongside new forms of finance, we have seen the rise of FinTech services, such as ApplePay, which are transforming the way money is stored and transferred.  Traditional banking is being unpacked into its constituent parts and businesses and consumers alike are seeing that more convenience, and often better value, is available by distributing their purchases.

The term ‘Alternative’ might diminish as the lines begin to blur in the future, but it has shown no signs of hampering the growth of finance or FinTech so far.