Asset Finance  through peer Lending

The launch of Innovate Finance by Chancellor George Osborne is a sign that the government is serious about supporting our FinTech industry. I just hope that it is not all smoke and mirrors.

While I applaud any initiative to support the growth of our industry I cannot help but have one eye on the past. Many years ago with de-regulation, the financial industry flourished, innovation was rife, from actually financial instruments, to trading platforms and new ways of doing business.

However many innovative companies became overburdened with regulation from the UK and Europe. The general perception was that small businesses were bad, big businesses were good. This forced massive consolidation due to the cost of complying with every new detail and process that was put forward and consequently we ended up with the 'too big to fail' situation.

I fear that in trying to encourage the industry there will be those large peer lenders who will have a voice at the top table, who have a vested interest in raising the barriers to entry under the guise of customer protection. We will then see more VC money coming in, consolidation, and the same old problem we had previously. I doubt also, whether this will be of any benefit to the lending community who made the industry the success that it is becoming. Big money certainly didn’t make banking better, or our industry would not exist. I remember a time when I could have a coffee with my bank manager, it now takes me 20 minutes minimum to speak with anyone other than a computer who constantly informs me that I ‘can check my details online at www.....’. Our industry is aiming to change all that.

I hope that Innovate Finance and those involved recognise that the industry needs to be nurtured, not overly burdened by process and regulation which would end up making this personal service unprofitable.

Protecting investors is already at the core of anyone who operates a platform (or it should be) and regulations right now are on the money, striking a balance between protection and innovation, pushing this too far and tailoring these to large businesses will stifle the industry and stop new comers improving it (which is why the banks have had a strangle hold for hundreds of years).

The US has surged ahead in our space, but the complicated nature of their inter-state laws on financial products may slow them down, we here in Europe have an opportunity to become the center of Fintech in the world, the prize is very big, the responsibility of government to leave innovators space to innovate is huge.