The era of people-to-people finance

History has taught us, in its long journey, that technological advances bring us closer together. For a message or a chest full of precious metals to reach Spain from America in the 16th century, it took long days of sailing across the ocean. Today, we can exchange messages instantly from thousands of miles away. And invest in a business that is based in a city we have never set foot in. As far as the financial sector is concerned, technological transformations have opened the doors to a new era: that of people-to-people finance. The traditional financial system, monopolized by banks, has been overtaken by the emergence of online alternative financing platforms that have put cutting-edge technological developments at the service of businesses that need to obtain liquidity. In this context, the era of people-to-people finance has made its way, humanizing the sector and opening it up to small investors and businesses in the real economy. In this article, we will highlight all the opportunities brought about by the era of people-to-people finance.

The age of technology can also be the age of people

We have been reading and hearing for and for passive that we live in a time where technology is the key. Artificial Intelligence, Business Intelligence, Machine Learning... Today's major technological transformations are going to deepen the revolution brought about by digitalization. Software, robots... where are the people left? At the heart of it all. The mission of technological solutions is to make people's lives easier and help businesses grow. No more, no less. That's why they must be accessible, clear, and easy to use. The rise of alternative financing platforms such as Inversa Invoice Market proves the validity of this argument. Thanks to technological developments such as financial marketplaces, small savers can make their money profitable and small businesses and SMEs can find new ways of financing, beyond traditional banking products. Thus, on both sides of the technology (the online alternative financing platform), there are people: savers and entrepreneurs.

Few and large corporations vs. many investors of all sizes

The various forms of alternative financing such as crowdlending, crowdfunding, or crowdfactoring are based on the multiplication of the number of investors, as the prefix crowd indicates. In other words, people are willing to invest their money in other people. Alternative financing... to what? To the traditional banking system, which, moreover, is increasingly made up of fewer and fewer players. The era of small banks and local savings banks is far behind us. The banking concentration that began decades ago and accelerated in the wake of the 2008 financial crisis has left a landscape made up of few but very large entities. Thus, the large banking institutions, due to the very size of their structures, are far removed from the daily heartbeat of thousands of people and businesses. Moreover, their capacity to adapt to the specific needs of citizens and companies is limited. Their catalog of financial products is of a generalist nature. Businesses must adapt to these products and services, not the other way around. In this context, the rise of online alternative financing brings with it the possibility for companies to access new ways to obtain liquidity beyond banks. Ways supported by the technological development and financial knowledge of Fintechs and, above all, by the money of savers and their willingness to bet on ethical investment and contribute to innovative projects and businesses in the real economy that can grow and succeed in this complex world in which we live. Returning to the mantra of this article: people-to-people finance.

People-to-people finance: The human factor behind the numbers

In this way, people no longer do finance only with banks, but also with other people. This is not just a slogan. It is a radical paradigm shift that contributes to highlighting the human factor behind the numbers. After all, businesses are, above all, the people who make them up. This is not incompatible with the fact that the raison d'être of companies is to make money. On the contrary, professionals are the main asset to achieve it. The numbers can only be achieved if there are people behind them, making an effort and giving their best. Therefore, the human factor must be central when designing financial products and services, but also a key element in deciding which ones to choose. Online alternative financing platforms demonstrate the validity of this idea. Their business models are firmly committed to people-to-people finance. Thus, investors do not simply opt for a financial product, depending on its profitability and conditions, and wait to reap the rewards of their investment. Rather, they take on an active role, knowing exactly what kind of projects they are investing their money in and what purpose they are going to use it for.

Real-world people investing in real-economy companies

Given what we have just discussed, we can point to one of the most stimulating effects of the rise of alternative financing platforms: the possibility for savers to invest directly in real-economy companies and innovative and ethically responsible projects. People-to-people finance brings with it multiple advantages, both for savers and companies seeking liquidity. As far as investors are concerned, in addition to getting a return on their money and therefore making the most of it, they can make a visible and plausible impact on society and the economy by supporting businesses in the real economy. And as far as these businesses are concerned, they can obtain liquidity quickly, without having to deal with banking bureaucracy and thus diversifying their financing channels. When humanism burst onto the scene in the 14th century to place people at the center of our way of thinking and understanding the world, it brought about an immense change in society, the economy, and culture. The current era, in which technology is more present than ever in our lives, has not only positioned innovation as a driver of transformation and progress but can also serve to put people back at the center of what we do. The many types of alternative financing are moving in this direction. Through people-to-people finance, technology, social commitment, and economic growth can be brought together. The ultimate goal of all three is to ensure that we move forward and live in a more prosperous world. It may sound utopian, but it is not. People-to-people finance has immense potential to change the way businesses finance themselves and generate wealth. The power of people investing in people.