From the course: Foundations of Business Banking

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Alternative financing

Alternative financing

From the course: Foundations of Business Banking

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Alternative financing

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- Alternative financing mechanisms, such as peer to peer loans, crowdfunding, and loans obtained through non-traditional FinTech companies can be a threat to traditional financing mechanisms. But for now, only for the financing of small companies. Here's a story that illustrates this potential threat. A few years back, I was standing in the lobby of a bank waiting my turn. On the wall to my right, I saw a big poster advertising the bank's business loan rates. "Business loans for as low as 6%" the poster said. On the wall to my left, I saw another big poster. "Attractive rates for depositors. We are paying rates as high as 1.2%." Well, as I stood there in line, I thought, well, what if the bank's depositors and the bank's borrowers started talking to each other? The depositor could get a higher rate and the borrower could pay a lower rate if they went out in the bank's parking lot and negotiated directly between themselves.…

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