What is Alternative Finance

A new term has been developed in the last decade which refers to commonly known as alternative Finance that's the word that's been used and coined for this industry which is providing again finance and funding but beyond and outside the traditional method the traditional method has always been you know a person who needs Finance traditionally what does he do he'd always go to a bank that was a place known for providing funds but then what's happened is in the last decade there's been a boom and a growth a rapid growth of financing providers which are Beyond Banks.


When we talk about alternative Finance it will not be a bank providing the finance it will be another business it'll be another company it's a none Bank funding usually small to medium Enterprises small to medium organizations individuals maybe you know some group of people and so on and so forth so alternative Finance refers to a system which is developed whereby financing is issued by non-bank lenders and within this scope there are a number of ways which these non-bank lenders can deploy financing and that's really how it differs from the traditional way whereby traditionally you would have this bank now alternative Finance refers to really this technological based remember that's really key here in understanding that was a driver for this was driving alternative Finance it's technology which is allowed to minimize cost is allowed to open up more Avenues and channels it's allowed to reduce transactional costs it's increased market efficiency and allowed to connect you could say lenders and borrowers together whereas through a bank although a bank uses a traditional conventional bank would be using the deposits and leveraging those on its asset side.



In an alternative Finance what happens is you have a platform and this platform is connecting investors and borrowers there's much more transparency there's much more you could say the investors would more likely know who the borrower is that's the key up here so you're reducing the intermediate is disintermediation you're reducing the intermediary it's being fragmented and so we're removing the intermediary therefore costs are decreasing and because of Technology you can now have a seamless experience on a platform and experience uh receiving and also investing so you can receive both or experience both sides of the spectrum when it comes to Alternative Finance.


Disclaimer  The following article is prepared by TAIF with the help of the video available on its YouTube Channel of TAIF. The editing of this article is done by a human after carefully reading and listening to the recorded program, in case of any mistakes and errors we apologize in advance, please write to us at contact@taiflearning.com