Crowd Capital Raising encompasses everything from peer to peer lending to alternative lending platforms focusing on specific sectors like residential real estate and seed equity crowdfunding. It's an area that has steadily grown to be perceived as a potential disruptor for banks, yet the impact of these marketplaces is disputed. At the UBS Future of Finance Forum on Crowd Capital Raising in New York in December 2016, we debated how market participants, regulators and consumers are being impacted, and whether these new platforms could contribute to efficient, secure and inclusive financial markets. Given the level of expertise of those present, we were able to better analyze and evaluate this fast-growing theme.
As an example, we explored consumer dynamics, and asked, why do people use the Crowd over a bank? Considering scale, liquidity, transparency, and loyalty, we also developed understanding on the robustness and longer-term viability of these models, as well as the associated macro-economic and social issues that could be wide-ranging.
Given UBS's position as a global leader in Financial Services, we were keen to debate how global banks and connected organizations should participate in current market dynamics of marketplace finance. There was particular attention paid to the value-chain and the technologies likely to be utilized, with an interesting theme the regulatory development of the Crowd Capital Raising space, and with it the apparent democratization of finance.
Our broad conclusions were that marketplaces' access to equity and debt is servicing a healthy, and under-served demand, given that post-2008 global banks have not participated so actively in the smaller size of transactions that are commonplace with marketplace models. Similarly, permissive regulation is fuelling growth on the debt-side of the market, with pricing, transparency and speed offering ease of use and attractive returns, especially for millennials. Those present also concluded that a digital offering is essential if banks move to take part in this market, and that if they chose to do so, they could partner with fintech to quickly synthesize clients, data and best-in-class technology. You can watch the keynote from John Buttrick of Union Square Ventures, in which he provides a great overview of the topic, here, along with videos of some of the other contributors to the forum.
As with previous UBS Future of Finance Forums, the Forum on Crowd Capital Raising is followed by a white paper exploring the conclusions we reached in depth; you can download the paper at the right of this page. Previous white papers from the series can be found using the links below.