We live in times of change. Banks continue to be all about money. But money is less and less about banks. Nowadays people pay, send money, borrow, lend, invest and secure financing for projects increasingly without the involvement of banks. Understanding the fintech phenomenon is an imperative for us all. "Fintech Explained" covers some of the main themes related to fintech: P2P lending, alternative payments, blockchain, cryptocurrencies and wealthtech. This book is addressed to a broad audience and consequently is aiming to cover potential concerns from all of them: students, finance and banking professionals and in general all readers who are passionate about innovation, technology and finance, and who are keen to stay up-to-date with the fast-paced developments that are occurring around us. The book is hopefully answering many questions, but it aims to set the ground where additional further questions will be asked. By you, the readers.

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Ana-Maria Minescu

FINTECH Explained

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Copyright2018 by Ana Maria Minescu


A page in the journal of an anonymous millennial

Thursday, 5thof December, 2017

“I’m an early bird. Usually.

I’ve started my day by checking the messages onStockTwitsand the newsfeed oneToro. Afterwards I placed some orders oneToroto buy some shares that seem to be trending. I also discovered a few more traders worth following on eToro – they’ve had a good run recently and they have an interesting investment philosophy. Tomorrow the US non-farm payrolls for the previous month are published – as I like to think of myself as a trader of volatility to some extent, I also wrote a small trading algorithm that I had in mind for some time onAlgoFast. As I like to diversify my portfolio, I’ve decided to invest a small amount in cryptoassets as well. I check what my portfolio did overnight. In my account onBinance, I sell some ADA, that had a great run recently and I buy some XRP. I buy some ETH onBitstampwith euro and transfer it tomyetherwalletto have it ready for that ICO that I’ve been following onTelegramand that launches today.

Time to go to the office. On my way I checked on my mobile my portfolio I have withWealthfront. I recommended Wealthfront to my parents as well, but they preferBetterment, because they already use it for theirRetireGuidetool which they find very practical. Ah, talking about my parents: today I have to buy the present for them for their anniversary next week! But I know what to get and I’m buying it online; I’ll pay withPayPal, it’s all easy and quick. Luckily I’ve just received the money back fromLendingClub. Ah, and talking about shopping… I ran out of my favourite night cream, I must not forget to order a new one tonight by pressing theDash Buttonfrom Amazon Prime!

Lunch time! I meet my best friend for lunch and he tells me he gathered the financing needed to launch the pop-up bar project he had in mind viaKickstarter, a crowdfunding website. Not only did he receive the funding faster than he was waiting for, but there is so much interest that he is even considering increasing the scale of the project. Another friend joins us for coffee. She raised an impressive amount of money for a social cause viaCrowdrise. We congratulate her for this. There is one thing even more important than making money: being charitable and helping the less fortunate ones.

In the evening, I go for dinner with another group of friends. I’m particularly glad to see one of them as he missed most of our recent dinners. He explains he’s been busy working on a project to issue common shares for a company onLinq, a blockchain-based trading platform of NASDAQ.

What a busy day! Money never sleeps, but for me it is time to go to rest…”

I will ask you now a slightly disturbing question:where is the bank in the story above? The money is obviously everywhere.

Indeed we live in times of change.Banks continue to be all about money. But money is less and less about banks.Nowadays people pay, send money, borrow, lend, invest and secure financing for projects increasingly without the involvement of banks.


This book is addressed to a broad audience and consequently is aiming to cover potential concerns from all of them:

Students will be the main beneficiaries of this book, because the book is giving structure to a topic which despite being already abundantly documented, is not necessarily available in text book format. The main benefits for students would be the detailed explanation of the main themes (such as P2P lending, alternative payments, blockchain, cryptocurrencies etc.) and the highlighting of the main stakeholders and geographies relevant for the fintechs. The future graduates who develop a passion for fintechs will thus know what exactly they could do and where they should go to achieve that.

However, the book is not a text book. Being a banking professional myself, I have tried to gather information which is of a commercial nature and which is detailed enough to be of great use for the professionals wanting to define, fine tune or execute the future strategy for the bank they work in. The main benefit for professionals consists of the analysis of sector trends and from the wide range of examples and case studies highlighted in the book.

Last but not least, the book is addressed to all readers who are passionate about innovation, technology and finance, and who are keen to stay up-to-date with the fast-paced developments that are occurring around us.

The book is hopefully answering many questions, but it aims to set the ground where additional further questions will be asked. By you, the readers.


3.1 Why is the Fintech revolution happening?

  The main driver of the Fintech revolution is the change of consumers’ attitude and demands. The world we now live in is a hyperconnected world. We are almost constantly connected to the Internet through the smartphone, the tablet, the PC , the smart watch or the smart TV. The social media and the mobile apps are no longer an innovation, but the surrounding reality. Consequently, our demands have shifted towards features such as improved transparency, non-stop accessibility, automation and ease of use. The main agents of this change in demand are the Millenials{1}.

Moreover, the 2008 financial crisis has generated regulatory changes in the banking sector, which are aiming to make the banking sector safer and more secure, but which sometimes (as a side effect) represent a significant burden on the banks. Higher and higher capital requirements, disclosure requirements (e.g. MiFID) and systemic charges (bank levies) are only a few of the challenges that the traditional banks are facing. This context created opportunities for innovation from the financial start ups{2}.

Brett King in “Bank 3.0” identifies four phases of behavioural disruption{3}, meaning four phases of disruption occurring within retail financial services which can each be seen as a game changer:

- the arrival of the Internet, amplified by social media;

- the emergence of the smart phone;

- the shift to mobile payments on a larger scale;

- “banking being no longer somewhere you go, but something you do”

The social media age brought the concept of “crowd”, allowing customers to share experiences, feedback and recommendations. Consequently any brand (including bank brands) became more vulnerable in front of the more and more demanding customers. Bad experiences with a brand are quickly shared via the social channels, with a significant destructive potential for the brand. While before the emergence of social media, the banks were able to be selective in choosing their clients, the balance of power has now shifted massively in the favour of the customers, who can be very selective when choosing the bank they will work with, based on the large variety of knowledge and opinions shared via the social channels.

The emergence of the smart phone is important and can be classified as a distinct phase because the smart phone is the driver for mobile banking. A large number of banks are already offering their customers mobile banking apps, which allow you to access all the services available on the ATM (except for cash withdrawal) and even more: check the account balance, make a deposit, make a payment etc. Many banks are already making it possible to apply for a consumer loan via the mobile banking, without the need to go physically into the branch and talk to a relationship manager.

  The shift to mobile payments on a large scale refers to more than just making a payment via the mobile banking app. It refers to the “convergence of our mobile phone and our credit/debit card”{4}. Payments through SMS and NFC-based (Near Field Communication) mobile wallets are already being offered by a variety of providers (banks, telecoms, technology companies and independent companies). 

The importance of this phase stems from two major facts. On one hand, when adopted on a global scale (ie the adoption of a “technical standard for mobile money that could be adopted globally by network operators and device manufacturers”{5}), such mobile payments would kill almost completely the need for cash. Secondly, the loss of physicality could translate into the disappearance of the need to interact with a bank for daily banking operations, meaning that for some people (such as the unbanked ones), “the phone would become the day-to-day bank account of the near future”.

The fourth phase refers to “banking being no longer somewhere we go, but something we just do”.  As Bill Gates, Microsoft chairman, already predicted since 1994: “Banking is necessary, but banks are not.”

Certain banking services have already been provided for a long time by non-financial services companies, for example: credit cards offered by supermarkets to their customers (Tesco, Sainsbury’s, Waitrose and ASDA in the UK), credit lines offered by retailers to their customers. This trend is about to continue and to be amplified at a much larger scale and at a much more rapid pace, especially given the emergence of the Fintech startups as a parallel and combined development. 

3.2 Who are the main beneficiaries from the Fintech revolution?

The main beneficiaries are of course the consumers, who are just receiving better service: faster, cheaper, more transparent and non-stop accessible. In addition, there are several sectors and sub-sectors which are perfectly positioned to benefit from the latest developments: payments, crowdfunding, lending and wealth management.

3.3 The Fintech ecosystem – who are the players?

In a report analyzing some of the regions/hubs with the most significant FinTech activity (named ecosystems), Ernst & Young (2016){6} identifies 4 attributes necessary for the well-functioning of such ecosystems. These attributes are: talent, capital, policy and demand, and each of them is represented by various players, as detailed below.

Talent refers to the “availability of technical, financial services and entrepreneurial talent” and is displayed by players such as: providers of fintech services (financial institutions, non-financial institutions, start-ups) and providers of knowledge about fintech (the academia). Due to the complex nature of fintech activity (combining financial services with a strong technological component), the lines among the main categories of providers of fintech services and more and more blurred. Some start-ups have grown large enough and have even gone public, but others are finding it beneficial to enter into partnerships with established financial institutions. These institutions at their turn understand the pressure from the fintech fenomenon and in an attempt to maintain their market share, they either develop fintech capabilities internally or seek partnerships with startups. Last but not least, large established technology companies with strong customer bases try to leverage on their technological knowledge to start delivering financial services to customers (telecoms offering mobile payments services or online lending, ecommerce platforms providing consumer finance or mobile wallets etc).

Academia – despite the overwhelming quantity of information available for free on the internet about fintechs, which anyone can use to become familiar with the new area, there is a need for formal education on fintech as well at all levels (undergraduate, postgraduate, executive education). In addition, there is a need for formal education in areas where students acquire the skills which are needed to work within a fintech firm, such as: data science, data analysis etc. A variety of courses started to be launched and some world renowned universities are being very proactive in preparing the young generations for the new world we are in. The following paragraph provides a few examples of such initiatives:

University of Oxford’s Said Business School is offering the Oxford Fintech Programme (of which I am a graduate as well) and the Oxford Blockchain Strategy Programme; Wharton University introduced a Fintech course available to undergraduate students; NewYork University has launched fintech courses at several levels: FinTech for Executives (a short course for executives), a FinTech specialization available to MBA students and a Foundations in FinTech elective course available to undergraduate students.

Capital is defined as “the availability of financial resources for start-ups and scale-ups”. According to Ernst &Young (2016), such financial resources can take the form of seed capital (GBP 0-5mn), growth capital (GBP 5-100mn) or listed capital (market listing). In terms of who are the providers, capital comes from Angel investors, Venture Capital (VC) investors and IPO investors.

Angel investors are wealthy individuals who “invest in early stage or start-up companies in exchange for an equity ownership interest”. At the initial stages, the angel investors will be keen to see the elevator pitch for the new business, a pitch deck (or executive summary), a prototype of the proposed product and information on who the early customers may be. They will also be willing to understand the details of the financial projections, the assumptions behind them, the total capital required and how long that is expected to last. Regarding the management team and founders, their profiles, background and motivation for the project are essential{7}. An entrepreneur can access angel investors through a variety of channels, such as angel investor networks, crowdfunding sites (eg: Kicksharter, Indiegogo) or dedicated websites such as AngelList{8}. Angel investing is a regulated activity. In the USA for example, angel investors need to meet the definition of accredited investors according to the Securities Exchange Commission (SEC){9}. Getting capital from angel investors is the preferred way for businesses which are already beyond the start up phase, but which are still so young that they need additional capital to develop the product or to define their marketing strategy.

While angel investors are wealthy people willing to invest in interesting and promising business ideas developed by others, venture capital comes from venture capital firms. Venture capital firms are made of professional investors, who can be ‘limited partners’ (those who invest money in the firm) or ‘general partners’ (those who manage the fund and work with the individual companies that the firm invests in). VC firms normally provide much larger amounts of money (Compared to angel investors). After the investment is made, the firm becomes actively involved in how the funded company is run. The aim of the VC firm is to exit from the investment after a period of several years, very often through an initial public offering (IPO){10}.

A strong presence of talent and capital in a financial center makes it become a so-called FinTech hub. Relevant examples of FinTech hubs are: UK (London), California, New York, Germany (Hamburg, Berlin), Singapore, Hong Kong, Sweden, Israel, Australia. 

Policy refers to regulatory regimes (ie, support from regulators for new players), government programmes (aimed at encouraging competition and innovation) and taxation policy (ie, tax policies that are favorable across all stages of funding). According to the Ernst & Young (2016) study, the UK has the strongest FinTech policy environment due to large extent to the involvement and support of the Financial Conduct Authority (FCA). Other supportive countries from a policy perspective are Singapore and Australia, while the policy landscapes in the USA, Hong Kong and Germany “are viewed as more complex, conservative and opaque”{11}. Moreover, certain countries tend to specialize on specific sub-sectors of fintech, such as: cybersecurity in Israel, payments in Benelux, fund administration in Dublin, financial identity in Estonia, and cryptocurrencies in Malta and more recently in Switzerland.

Demand refers to consumer demand, corporate demand and demand coming from financial institutions (FI). According to the Ernst & Young (2016) study, as of 2016, the highest adopters of FinTech products were the US and Hong Kong consumers (according to the % of digitally active consumers that use FinTech, calculated for a selection of locations with FinTech activity), while the corporate demand (excluding demand from financial institutions) was strongest in UK, USA and Germany (according to the propensity of SMEs to adopt tech and digital solutions). In the case of demand from financial institutions, the study highlighted clearly London and New York as the clear leaders, reflecting the two cities’ status as the world’s largest financial centers{12}. 

3.4 The Fintech ecosystem – what are the tools?

As FinTech refers to that part of financial innovation which has a strong technological component, it makes sense to analyse which are the tools for innovation available to the various stakeholders.  Start-ups tend to use incubators, accelerators and venture capital resources, while the larger organisations tend to organize innovation labs and hackatons. Large organisations also afford in general larger spending on Research & Development.

Brigl et al (2014) explains not only what incubators, accelerators and venture capital resources are, but also what they have in common and in which ways they differ. While venture capital focuses in general on more mature start-ups, incubators and accelerators focus mainly on start-ups which are in their early development phases.

Incubators and accelerators are often assumed to have the same meaning. Indeed, both of them represent tools for start ups in their early stages and provide help to the start ups to grow their businesses (including office space)  and to improve their chances of attracting venture capital investments at a later stage. However, incubators focus mainly on innovation and development of the business model for a disruptive idea, while accelerators aim to “accelerate growth of an existing company” (Forrest (2014)){13}. This translates into how individual programs are structured, in the time frame envisaged and in the content and help made available to the participating start ups.

Following a very competitive application process (with selection rates below 2% in some cases), the start ups accepted into an accelerator benefit from a small seed investment and access to a network of mentors, alumni and investors, in exchange for a portion of the equity. During the course of several months, the accelerator gets the start ups “into the best possible shape and refines their pitch to investors” (Y Combinator{14}).

Examples of accelerators include: Y Combinator, Techstars{15}, Brandery{16}.

Incubators address themselves to companies which are at the very early stage of development (developing the innovative idea, making the business plan) and they can function in conjunction with government entities, venture capital firms and large corporations{17}. Office spaces are generally rented by the startup. Incubators include services such as: market research, internet access, access to education resources, co-working opportunities.

Examples of incubators include: Idealab{18}.

Venture Capital firms address themselves to startups in more mature stages of development. According to Zider (1998), “theventure capitalistbuys a stake in an entrepreneur’s idea, nurtures it for a short period of time, and then exits with the help of an investment banker”. The VC firm invests in a company during a time in the company’s life “when it begins to commercialize its innovation” and “until it reaches a sufficient size and credibility so that it can be sold to a corporation or so that the institutional public-equity markets can step in and provide liquidity”{19}.

Examples of venture capital firms with interest in the fintech sector include: Anthemis Group, First Round Capital, TTV Capital and many others{20}.

The larger companies tend to use Innovation labs and hackathons as innovation tools in the area of fintech.

A study conducted by the Luxembourg Institute of Science and Technology (LIST) identified a series of traits which are definitory for Innovation labs: imposed innovation topic, large scale challenges, revolution rather than evolution, autonomous setup, diverse participation, collaborative, long term perspective, a diverse set of tools and going beyond ideation.

A large number of corporations (financial and non financial) have founded innovation labs. Examples include: UBS etc.

Hackatons are events organized by a large organization, where they gather a large group of software developers and entrepreneurs for a short period of time (24-48 hours) and puts them in front of a challenge for which they have to develop a solution or an app in the given time frame. Grijpink (2015) believes hackathons are becoming nowdays “a valuable tool for accelerating organizational change and fostering a quick march, costomercentric, can-do culture” in the context where speed and agility are increasingly important for all organizations regardless of their size{21}.

Most major banks are organizing hackatons on a regular basis, as documented by the press.

3.5 Who should feel threatened by the Fintech revolution?

Rarely are such big transformations occurring without generating negative consequences for at least some areas or groups of people. If we start analyzing the main changes (and benefits) brought by the FinTechs, we can start to identify the losing side(s) as well.

3.5.1 The workforce

The financial sector employs a significant number of people across all age groups. However, this number is already on a decreasing trend around the world.

More and more jobs with a repetitive content which require mainly routine skills are being transformed through the use of automation. This means that the number of such jobs is steadily decreasing. Even high-skill jobs performed by office employees are being eliminated or reduced in terms of content through the adoption of artificial intelligence or robotic process automation (RPA) methods. As an example, robotic process automation can be implemented in banks for activities such as: mortgage approval, expense reporting, regulatory compliance, fraud detection (ie robots detecting fraudulent transactions) and others. RPA is in fact a programmed software that is able to simulate simple human actions. It acts like a virtual workforce and it can be used for repetitive and rule-based tasks and in the situations where high volumes of data need to be processed. The simplification of work and the significant reduction of time needed to perform the activities envisaged imply a reduction in the workforce previously involved in those activities.

With the continuous pressure on revenues following the financial crisis and a strong focus on cost cutting, the technological developments that allow banks to significantly reduce workforce are very welcome. In a conference in Frankfurt in September 2017, the former CEO of Deutsche Bank, John Cryan, suggested that half of the employees of the bank he was running could be replaced by robots, following implementation of machine learning and mechanisation. He explained that “in our banks we have people behaving like robots doing mechanical things, tomorrow we’re going to have robots behaving like people”{22},{23},{24}. Another recent example is National Australia Bank (NAB), which announced in November 2017 that it would cut 12% of its workforce (or approx. 4.000 employees) over a period of three years as a result of planned implementation of artificial intelligence (to replace customer support staff) and digital systems (to reduce in-branch jobs){25}. At a more general level, Vikram Pandit (a former CEO of Citigroup) declared in September 2017 that he expected 30% of banking jobs may disappear over the following five years as a result of technology{26}.

3.5.2 Owners of commercial real estate

The traditional banks have been performing their activities mainly through their network of branches. They have already started to expand their virtual banking services and they are onboarding more and more clients via these new channels. However, they still have a large network of branches in place which are very expensive to maintain and due to the ongoing pressure on margins they will be forced to close them. Many banks have already embarked in ample branch-closing initiatives (as of 2017) and many such initiatives are in progress or are being (re-)launched.

As of 2017 there were approx. 189,000 branches of credit institutions in the European Union (vs. more than 237,000 in 2008){27} and as of 2016 about 93,000 such branches in the USA{28}.  The imminent closing of a significant part of these branches may create pressure in the real estate sector (commercial properties sub-sector){29}.

3.5.3 Universities

Certain university degrees and certifications would need to change dramatically in order not to become obsolete

The recent developments in technology have been changing all areas of finance. For somebody who works in finance (even if as an employee of a traditional financial institution) it is no longer enough to understand only the traditional side of finance. The competition and the influence from fintechs are far too significant to ignore. Nevertheless, most of the finance courses at university level are still very much leaving out the technological innovations related to finance. This would need to change in the sense of including the fintech developments in the curriculum as well.

In addition, certain technological developments are challenging not only the content of the traditional university courses, but even the way in which they function. The emergence of artificial intelligence and automation make the offering of onlinedistance learning possible on a very large scale. According to Smithsonian.com, “unless universities move quickly to transform themselves into educational institutions for a technology-assisted future, they risk becoming obsolete”. In India, the lack of student demand has already caused the closing of 800 engineering colleges out of approx. 10.000 existing ones. The risk of low student demand due to the increasing popularity of online courses is expected to become significant for the US universities as well in the coming decades{30}.

On the other hand, more and more universities have been launching short courses in fintech, in an attempt to offer their students the relevant skills for the current rapidly evolving environment. University of Oxford’s Said Business School, Wharton University and New York University are just a few of them (see previous section for details on the courses they offer on fintech as of the date of writing this book).

3.5.4 Banks

Further pressure on margins for the banks and on their market share

Being very cost efficient, the fintechs are able to offer their products and services with very low commissions. Consequently, if they want to still be competitive, the incumbents have to adjust down their commissions as well, which results in a significant pressure on their margins. According to Citigroup, Retail (as a business segment) is particularly at risk (especially regarding payments and unsecured lending), while corporate and wholesale banking are currently only under limited pressure{31}.  Unfortunately Retail accounts at the moment for a large share of the banks’ profits (ranging from 43% in Europe to 19% in Japan{32}), implying that such a threat is significant. However, certain services provided by the fintech are new, not already provided by banks, meaning that the banks have to a certain extent also missed out opportunities{33}.

3.6 Topics addressed in the book

The fundamental transformations mentioned in the previous pages would not be possible without the tremendous developments that have occurred recently in technology: NFC, big data analysis, cloud computing, blockchain, virtual reality, artificial intelligence etc.  The additional value that the Fintech companies are bringing comes exactly from the technologies which they are based on. Technology makes it possible to improve overall the banking services by simplifying the processes behind them, more precisely by driving the costs lower, by shortening the response time (for example in the case of a loan application) or by redefining a service from scratch (e.g. payment through SMS).

While the area of fintech is incredibly vast and touches on a variety of concepts, the current book aims to focus only on the following topics, that are generally considered of central importance:

- Alternative lending

- Alternative payments

- Wealthtech

- Blockchain

- Cryptocurrencies


Generally called Peer-to-Peer (P2P) lending, alternative lending can be found under other names as well (online lending, marketplace lending etc). As the name suggests, P2P lending platforms connect savers with money to lend with individuals or small businesses that need to borrow, creating thus a market place.  In its initial form, alternative lending eliminates financial institutions from the lending process, simply making it easier for an individual to lend money to another, charge interest and wait for the repayment of the loan. The loan experience through an alternative lending platform is generally entirely digital (including application, origination, underwriting, servicing) and the approval is very often received by the applicant almost in real time, which makes it significantly more efficient (in terms of costs and time) than the traditional loan experience through a bank, which can even take weeks for approval sometimes. However, meanwhile the financial institutions have seized the opportunity and the threat posed by alternative lending and many of them have launched in such projects themselves or partnered with dedicated startups in order to be able to provide similar services.

Although they are often used interchangeably, the various names used for defining alternative lending DO have some subtle differences among them. The most widely used (and the initial term) was peer-to-peer lending. This term referred to an online platform which would simply connect borrowers and lenders. However, as the sector evolved with the involvement of institutional players and the emergence of balance sheet lending provided by online platforms, the term P2P lending was not comprehensive enough anymore. Thus the term marketplace lending (MPL) has started to be used.  Online lending is another term which is general enough to cover the different evolving characteristics of the sector, but maybe not specific enough.  Last but not least, alternative lending is general enough to exclude the lending performed through traditional banking methods and channels, but possibly too general, as it lacks the reference to the technological nature of the sector. Since there is no standardization in the relevant literature, in the current chapter I will be using all four terms interchangeably. 

One of the first areas to be explored by fintechs, alternative lending has been around since 2005, when the UK-based P2P lender Zopa was founded, followed in 2006 by the launching of Prosper Marketplace and LendingClub in the USA and Paipaidai in China in 2007. One decade later, in 2017, among the 25 fintech unicorns identified by CB Insights globally, many of them were alternative lenders{34}: Affirm, Kabbage, SoFi, CreditKarma, FundingCircle, GreenSky, Lufax, Avant, Prosper.

Meanwhile, other important milestones have been reached. Several alternative lenders have gone public, with the all-time high of equity funding for the alternative lending sector reached in 2015 (USD 6.3bn collective equity funding). In addition, consolidation became an important trend in the sector, with a peak in the number of acquisitions, mergers and shutdowns reached in 2017{35}.

However, as the industry matures, skepticism has also increased in relation to the business model of alternative lenders, which still remains to be tested in times of downturns, increased regulatory requirements, increasing operational challenges related to scalability (internal controls, risk management, loan servicing) and increasing concerns around cybersecurity{36} and rising interest rates.  Any of these factors could put pressure on the borrowers and lead to an increase in defaults.

While at its inception, Zopa was promoting the concept of “alternative finance” as something revolutionary (“finance by the people, to the people”), according to FT (2016), a decade later, the P2P was transformed from alternative finance into “another lending channel for banks, hedge funds, pension funds and others”, or in other words it is becoming more and more “a part of mainstream finance”.  On one hand, one may consider that the involvement of traditional financial institutions in the alternative lending sector may squeeze out individual investors. On the other hand, growing and achieving scale would not be possible without the institutional money{37}. Consequently, the involvement of the financial institutions in the area of alternative lending should be seen just as a natural step in the evolution of the sector. According to Forbes (2018), in 2016, a significant part of the alternative lending business was funded by institutional investors such as banks, pension funds and asset managers (45% of P2P consumer lending and 29% of P2P business lending){38}.