Democratising finance: Lenders must adjust to disrupters
The democratisation of finance comes in many forms. A notable one in my opinion is the use of more inclusive peer-to-peer and direct lending platforms to bypass costly and restrictive intermediaries. It directly links borrowers and lenders in more cost-efficient ways, particularly in consumer finance. Some approaches also provide individuals with empowering financial tools that enhance their ability to lead less stressful lives.
No wonder a growing number of Silicon Valley and other tech entrepreneurs are taking an interest in the financial sector — a large business area that cries out for disruption given its slow adoption of new technologies, its continued profitability, and the difficulties it has had in enabling superior client outcomes.
If finance breaks the tricky content-platform code, the considerable “win-win-win” of financial democratisation will accrue to consumers of financial services, the innovative providers, and a system that can now deliver better financial services to underserved segments of our society. If it fails to do so, the exciting developments will be contained primarily to the outer edges of an industry that still struggles to regain its credibility, social standing and contributions to inclusive economic growth.