Posted: Tuesday 17 January 2012
The rise of alternative banking
By We are all aware of the pressure on the financial institutions these days and the lack of liquidity in the market and this struck me as an opportunity for others to start to fill the space left by the banks' retraction from the market.
I read with interest the article this weekend in the Scotland on Sunday about the new "social lending" bodies that have set up e.g. Zopa Funding Circle, Yes-secure and RateSetter. Basically they are peer to peer lenders with savers allowed to set the level of interest they want to charge, how much they are willing to lend and the required return and risk they are willing to take.
These are obviously not going to fill the space in one fell swoop but it got me thinking about who else might seize this opportunity. For instance Credit Unions have just received a real shot in the arm from the Government in the new easing of Regulations governing what they can and cannot do as from 8 January of this year - amongst other things it allows Credit Unions to lend to Limited Companies and allowing interest to be paid on deposits.
This may well see Credit Unions merge and consolidate and expand their offering to SMEs and individuals not just within their catchment area.
I am sure there will be other bodies and people out there now all looking at ways of filling this space and I would be interested to hear of other ideas - some may even originate from abroad!
