The rise of crowdfunding: Threat or opportunity for the banking industry?

How should the banking industry react to the impressive development of crowdfunding? It does not seem to be the case that the rise of crowdfunding constitutes a threat for the banking industry. It appears to be a niche in the credit market, for initiatives which would otherwise not be able to raise funds. Nevertheless, to the question of whether there is an opportunity for banks to enter this market, the answer is less clear.

To look at this matter in the right perspective we need to shed more light on the following questions:

  • What is crowdfunding?
  • Europe being at the leading edge of the development of equity crowdfunding, what do we know so far on this type of crowdfunding?
  • What types of activities are financed by crowdfunding?
  • What are the determinants of the trend?
  • How is the regulation of crowdfunding going to evolve?
  • How should banks react?

The policy paper “The rise of crowdfunding: threat or opportunity for the banking industry?” brings together insights from academic, professional and regulatory perspectives.

This paper consists of a summary of existing research followed by an interview with Professor Armin Schwienbacher about the effect of crowdfunding on the financial services sector. Finally the paper contains a report on a Vlerick Regulatory Workshop on Alternative Financing, where 25 representatives from the financial sector were present (authorities, banks, crowdfunding networks).

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