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2019: 4 trends driving the development of collaborative financing

The participative financing platforms have revolutionized the credit market, allowing entrepreneurs to diversify their sources of financing and making available to the savers a new type of asset that was previously inaccessible to them: the loan to companies.

Throughout these years, the sector has evolved offering greater agility, speed and proximity to the customer, and the platforms themselves have been adapting to the needs of the market. To know what the immediate future holds for us, since October we have analyzed the trends that will mark the path of the sector during 2019.

Alliances between the crowdlending fintech and the big banks

In 2018, October and Liberbank have starred in the first collaboration agreement between a banking entity and a crowdlending fintech in Spain, and it is expected that in 2019 this type of alliances will continue to be carried out. In this way, the financing of SMEs will be strengthened through agile and digital solutions, and fintech will contribute to the innovation of traditional banking, which seeks to provide a better experience to its customers.

This new relationship will allow to implement the complementarity between banking and Fintech, which mainly benefits SMEs seeking financing. On the one hand, for the agility, given that, thanks to the technological development of the Fintech, they can give a quick qualification and grant the loan in a short time. On the other hand, for the purpose of the loan, since the Fintech is specialized in financing projects for any purpose of growth of companies, either for tangible or intangible assets and without asking for real guarantees (internationalize the business, invest in marketing, acquire a company, expand the team, digitize the company, etc.). And, finally, for the volume of the loan, since the Fintech will be able to complete what is offered by the bank.

European passport for crowdlending

In 2019 the approval of the proposal is expected to create a European passport that allows the operation of the crowdfunding platforms throughout the community block. Although three scenarios are being evaluated, for October the most recommendable would be the so-called “Regime 29” which stipulates that each platform can choose the regulation that it prefers to be subject to, whether at European or national level, since it would benefit those small ones that operate nationwide and have no intention of leaving the country.

The other two scenarios would be a maximum harmonization regime, which would promote the same European regulation for all and which would replace the existing ones that are already applied in each country. And the third, would be the minimum harmonization regime, in which there would be a common regime but that would allow each country to impose its particularities, a proposal that since October is not supported.

This new normative scenario could mark 2019 and boost collaborative financing in Europe to compete with other markets.

Public institutions will continue to be strategic allies in the consolidation of complementary financing

Throughout the process of unbanking promoted by the European Union, which has led to the creation of complementary financing platforms, some public institutions have shown their support for these new forms of financing.

We have the example of the European Investment Fund (EIF) which is part of the European Investment Bank Group (EIB), or the Public Investment Bank (Bpifrance), French counterpart of the Official Credit Institute (ICO), which have provided funds to October to contribute to the financing of European companies; or the case of Funding Circle, which also received funds from the FEI and the KfW Group of Germany, which is the German government development bank. From October, it is expected that this type of initiatives will continue to be produced throughout 2019 to make crowdlending stronger in the market.

Strategic agreements with large business groups

With the aim of increasing the flow of money to SMEs, Fintech will begin to reach strategic agreements with large business groups, as October has done in its Grow Together initiative.

Through this initiative and as Ambassadors of Crecer Juntos 2018, AccorHotels, the Adecco Group, Allianz, Arkéa, Edenred, ENGIE, Iliad, JCDecaux, SUEZ, Unibail-Rodamco-Westfield and Webhelp will show the way towards the diversification of funding sources to companies in its ecosystem by borrowing in and allowing them to do so. Crecer Juntos 2018 was presented in Paris in November 2018. In 2019, the initiative will be extended to include also Spanish and Italian business groups.

The participative financing platforms offer a complementary solution for companies and are consolidating in the Spanish market. By 2019, the momentum of its development will be marked by the new European regulation for crowdfunding, by the support of public institutions and by the alliances of Fintech with banks and large business groups.

Also published on Medium.

Published inFintech

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