BOOM! What was that sound you just heard? That was the faint echo of the financial meltdown of 2008. With one profound and sudden explosion, chaos erupted in the finance sector.
At least, that’s what it seemed like to the casual bystander. You flicked on the news and, all of a sudden, there it was – recession.
The reality is, as you might expect, quite different. The economy had been booming for too long, with too many finance professionals taking advantage of the situation, for the wheels to not fall off the carriage at some point.
Naturally, the meltdown hasn’t just led to the general public losing trust in banks, but banks losing trust in potentially risky businesses. Trying to secure a loan has become like trying to get blood from a bank-shaped stone, and it’s led to various other avenues opening up to try to help you in your financial woes.
As the banks have shut their doors, so too have alternative finance branches opened theirs, creating a multi-billion dollar market over the past decade.
Essentially, alternative funding is an umbrella term joining together a ton of different funding options, from invoice discounting to government grants to crowdfunding and many more.
The unstoppable rise of crowdfunding
Crowdfunding, in particular, has captured the public’s imagination, generating a slew of headlines and global success stories.
Actor and director Zach Braff, for instance, managed to rake in more than $3milion to make his film Wish I Was Here, citing a need for full directorial control. Even more recently, singer-songwriter Neil Young raised more than $6million for the production of a new MP3 player, entitled the Pono Player.
While these fall into the realms of A-list success stories, that doesn’t mean that smaller fare hasn’t received more attention – crowdfunding platforms have helped businesses start-up, first-time filmmakers get projects off the ground and ordinary people endeavour on personal projects.
Indeed, the phenomenon of crowdfunding has even been reported to be threatening the “big six” energy companies, with community energy projects receiving boosts from websites like Kickstarter, Indiegogo and Gofundme.
Indeed, increasingly these alternative finance outlets are providing the general public a freedom from the chains of banking institutions. It’s something that, unless they were already well off, most people didn’t contemplate even a decade ago.
As consumer choice widens, you can only hope that banks might see customers flocking elsewhere and attempt to win them back with better deals, easier-to-obtain loans and improved customer service.
After all, in a state of financial downturn, the best way to boost the economy is through competition. So, let’s hope the banks can keep up with alternative finance to give that recession a run for its money.