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Five big ways the pandemic

affected alternative finance

2. Slower momentum
There was also a noticeable slowdown in momentum for
the alternative finance options that remain. It's not that
there is no hunger for the services. The demand is still there
(and likely always will be). It's that the capital necessary to
fund these kinds of operations is tighter. Bigger alternative
finance operations are spread thin. They have to prioritize
much more than they did in the past.

Limited access to capital could force some smaller
operations to shut down. And there may be some major
consolidation in the alternative financing world in the
next few years.
3. Growth in demand

While slowing down and cutting back are happening
on the supply side of alternative finance, the demand for
By Chad Otar these services has never been higher. People are spurning
Lending Valley Inc. the traditional financing world in numbers that previously

It's hard to find an area of our modern world that hasn't would never have been predicted. Traditional financing
sources (banks and credit unions included) just aren't as
been touched by the COVID-19 pandemic. Some industries attractive anymore for many people.
have been better sheltered from radical change than
others, but the financial industry, in particular, has seen The quarantines, lockdowns and social distancing
major upheavals—especially in the alternative financing mandates passed by countries around the world have led
space. to people expecting remote and online access to all of their
financial services—spurring demand in a major way.
In this article, I'll run through five big ways the pandemic
has not only affected alternative finance options today, but Cashless payment systems are also exploding in
also will likely continue to shape alternative finance for popularity. A number of nations—the UK, Germany,
years to come. Ireland, Norway, Poland, and Egypt in specific—have
1. Culling of the herd removed a substantial number of restrictions on cashless
payment solutions. Some have even doubled the amount
The number one impact that COVID has had on the of money that can be sent with these protocols.
alternative finance industry is a reduction in the workforce
and the enterprises they work for. Prior to the pandemic Of course, nations are also finally grappling with the
the fintech and alternative financing world was booming. reality of cryptocurrency. South Korea, for instance,
Startups were popping up left and right at a pace no one recently unveiled a host of new legislation to deal with
could have expected or anticipated. this industry, regulating it without impeding its growth.
Other countries are likely to follow. Ultimately, alternative
COVID slammed the brakes on much of that growth. financing is becoming a little more mainstream, and
traditional financing is losing a lot of its luster.
A major reduction in startup operations has occurred in
this industry, particularly in Asia (where a significant 4. Blurring of boundaries
amount of growth was occurring). Numerous startups The shift in consumer interest toward alternative financing
folded, numerous established players significantly scaled has traditional lenders and banking operations looking to
back their operations, and the amount of money available blend alternative services with their own. The Bloomberg
in alternative financing was drawn back, too. Intelligence report most recently stated that the average
cost-to-income ratio from major European banks was
about 67 percent in 2019. That's huge.

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