Borderless: what is alternative lending moving towards
The sphere of alternative lending is going through a period of growth. The existence of this phenomenon is known to a large part of the world’s population, and in some countries it even outscores bank loans (for example, in China). Below, we talk about the main trends in the development of the industry.
Verification. The principle “the fewer intermediaries, the more attractive the conditions” works in the financial sector. Projects of this type even received their own term — fintech, which by the way, is turning 10 years old. In the credit sector, IT platforms directly connect borrowers and investors, excluding intermediaries (financial institutions) from the process, and optimize the terms of the offer. Investors receive more income than with bank deposits, and borrowers — a loan the need to leave their home and at an acceptable rate (much more attractive than when borrowing from a classical microfinance organization).
Our platform is also an example of a fintech startup. SHIFT.cash issues loans secured by personal vehicles, and both the investor and the borrower can take all the necessary actions online.
Cross-border. The youth of alternative lending has passed, and fintech projects feel constraint to be within just one country. Opportunities for both investors and borrowers in this sense are limited by the economic situation of the state, where there may be an imbalance in the demand for loans and investor opportunities. Therefore, new projects tend to reach the international level. And it becomes possible from the point of view of efficiency and safety, thanks to the blockchain technology. In SHIFT.cash, where all information will be recorded on the blockchain, and transactions are carried out using smart contracts, the investor will be able to monitor the status of their loans in real time, and all operations will be carried out instantly, and this despite the state borders. A person can be invested online from anywhere in the world, regardless of where the borrower is located.
Niche. Fintech as a direction exists for 10 years already. And to some extent this market has reached saturation. So, according to KPMG, investments in fintech start-ups in 2016 amounted to $ 25 billion — almost half as much as a year earlier. The matter is that the pool of projects that offer classical systems of work has already been formed. It is difficult for new start-ups to compete with industry giants. Therefore, the market began to specialize and segment. Projects that offer a new business model are more successful.
In the project SHIFT.cash, we found the balance optimal for ourselves in this sense. On the one hand, the service (lending secured by personal vehicles) is niche. And this niche allows us to form attractive conditions for both parties. Since the borrower backs his loan with collateral, we give him an interesting interest rate. The investor, in turn, works in the market with minimal risks. At the same time, it gets a more attractive interest than with bank deposits. On the other hand, the number of cars in the world in 2010 exceeded 1 billion, which means that, despite the narrow specialization, we have a wide audience.
