Alternative finance investors have seen the number of European platforms grow exponentially in the past few years. From what began as a small niche disrupting the traditional banking sector, there is now an argument that alternative finance should be considered a new asset class in itself. Understanding the differences between alternative finance platforms in such a fragmented market can be a challenge, making for a difficult choice for investors.
To decide if the platform aligns with their personal risk profile, investors need to be able to paint a picture of the platform’s customer. Factors that matter include maximum available loans, and whether the platform engages in consumer or business lending. The quality and transparency of borrower and risk detail available varies from platform to platform. Bondora offers investors details of historic default rates and loan purposes allow for richer analysis.
For potential investors the size of platform including market share and loan origination details are important – but the legislative framework under which the platform operates should also be scrutinized. The UK FCA is recognized as the gold standard in tailored legislation, whereas some other jurisdictions allow alternative finance platforms to operate under exemptions rather than direct rule-sets.
Finally, investors need to know who is entitled to become either a borrower or a lender. Each platform imposes their own rules – while some such as auxmoney operate only in one geographical area, others like Bondora offer global access to investors after an accreditation process.
In this infographic we review and compare key facts about the major alternative finance platforms operating in Europe today.