The kind of system Kickstarter uses has been used for hundreds of years. Unlike Medici-style patronage, where the richest people in town give large amounts of money, Kickstarter's system relies on the general public for funding projects, and rewards those backers.
Small- and medium-sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.
The digitisation of money, the rapid expansion of internet access and, of course, the adoption of mobile phones have created the perfect conditions to make it easier, secure, and affordable to save, spend, give, and borrow.
Our approach to banking is very different from the traditional banks or even some of the new banks. We do not necessarily go out and write single-cheque, large-ticket loans.
I wonder if people really know what the definition of crowd-funding is. Or, if there's even an agreed upon definition of what it is.
All of the marketplaces like Prosper, LendingClub, etc., as they get larger, they flip from being retail capital to institutional capital.
Traditional consumer banking will come under extreme pressure as its central deposit-taking and lending functions are challenged by online savings vehicles, crowdfunding, and loan syndicating by such nontraditional competitors as insurance companies, pension and hedge funds.
But it is as silly to think about peer-to-peer as applying just to music as it would have been to think about the Internet as applying just to pornography. Whatever the initial use of the technology, it has nothing to do with the potential of the architecture to serve many other extremely important functions.
We want to see more sources of alternative finance, from innovations in factoring such as MarketInvoice or in peer-to-peer lending such as Funding Circle which Labour local authorities are now using to support and invest in local businesses.
