‘Fintech' or just ‘Tech’?

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It’s not surprising that here at Alterest we strongly believe in platform-based lending to be the way of the future, not only on purpose-built marketplace lending platforms but also on existing tech networks which leverage their access to proprietary, rich data sets to extend credit. The recent revelation about Amazon having loaned over $3 billion bolsters this belief. Here’s more:


The boundaries between banks and new-age lenders continue to diminish with some banks partnering with alternative lenders like the MarketInvoice + Banco BNI Europe deal announced recently and established players like Zopa raising £32 million to launch a retail bank.

In addition to Amazon Lending, the other similar, prominent lending platforms include Square via Square Capital and Paypal via Paypal Working Capital. This type of lending is also not new in countries like India where the e-commerce company Flipkart has partnered with regional banks to support sellers on its platform.

And, after nearly a decade, debt has made a comeback in the UK too, with outstanding debt on credit cards now at record levels.


The inevitable evolution of the peer-to-peer model: Lenders, especially smaller ones, are likely to move away from the pure P2P model for various reasons. As the sector matures, the hybrid lending model along with a move to institutional capital becomes a viable route to gaining scale in investment volumes. Read more.

Alternative lending in the Americas continues to show signs of robust growth with the total size of the market increasing 23% YoY from 2015 according to the very insightful research published by The Cambridge Judge Business School. The full report can be found here and a summary of all the key facts summarised by us here.

Pollen Street Capital has recently been extremely active and is clearly bullish on the alternative lending sector. Along with BC Partners, they have recently increased their bid to purchase Shawbrook valuing the challenger bank at ~£868 million. Read more.

The ultra-low interest rate environment has forced credit card companies to compete fiercely, some even offering 43 months of interest-free balance transfers.Debt charities have suggested that this is the driving factor for why credit card debt in the UK has hit record levels with families owing £68 billion. This may well mean more interest paid to these card companies, however, should another recession hit, borrowers would begin to default — and that’s bad news for lenders. Read more.

However, the story is slightly different within the Eurozone. While economic growth in other parts of the world has more or less been coupled with rampant credit growth, the Eurozone economy has been expanding steadily for four years. Even with a ultra-low interest rate environment, the private-sector credit has essentially stagnated since 2009. Arguably, this means that the Eurozone is positioned earlier in the credit cycle than other economies — this stance was also popular amongst speakers at the European Private Debt Forum that took place in Paris on 30th and 31st of May as evidenced by one us from Alterest. Read more.

Amazon started lending around 6 years ago and has already originated $3 billion of loans with $1 billion originated in the last year alone. It provides select sellers on its platform with access to credit funded directly from Amazon’s balance sheet. “It’s a ‘can’t lose’ proposition for Amazon. It’s a very clever thing they’ve done”, said Jordan Malik, a Las Vegas-based publisher. The company has near perfect visibility of the borrower’s cash flows which enables both more accurate pricing of risk as well as prediction of when a business might need credit. Read more. Square and Paypal have also both loaned over $1 billion and $2 billion respectively to businesses. More here and here.

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