The continuing growth of alternative finance means clients will increasingly be seeking advice as to how they can benefit from this type of finance.
SMEs now have an increasing number of options when considering how to finance growth, as the world of alternative finance continues to evolve.
The Open Banking Working Group (OBWG) has recommended the creation of an Open Banking Standard that will make it possible for banking data to be shared and used securely. The OBWG convened in 2015 at the request of HM Treasury to explore how data could help people to save, borrow, lend and invest their money in better ways. It anticipates that this will create more competition and stimulate innovation in banking.
As an open API (application programing interface) begins to take shape, the banking industry may get a clearer steer on how to fund business models which are more IP and intangible dependable, something which to date they have struggled with.
In light of this ACCA has undertaken research looking at the impact of intangible assets on innovation and how to account for them in line with FRS102, with the results of a Malaysian pilot now available and a UK version due for publication shortly.
ACCA has also supported a study by the University of Cambridge and Nesta, the innovation charity, called Pushing boundaries: the 2015 UK alternative finance industry report. It examines the growth, trends and dynamics within the UK alternative finance sector in 2015 and is based on a study of 94 crowdfunding and P2P lending platforms. Key findings include:
in 2015, the alternative finance market grew to £3.2bn
the market is taking an increasing share of small business lending and start-up investment. Alternative finance business lending is 12% of the market for lending to small businesses in the UK. Equity crowdfunding is 15.6% of total UK seed and venture-stage equity investment.
the fastest growing models in 2015 were donation-based (grew by 500% since 2014 to £12m) and equity-based crowdfunding (grew by 295% since 2014 to £332m)
the market saw increased involvement from institutional investors: 45% of all platforms reported some level of institutional involvement
real estate is the single most popular sector: the combined debt and equity-based funding for real estate amounted to almost £700m in 2015.