Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .



  • 75% of experts believe alternative lenders are a threat to dominance of big banks
  • But 53% think new crop of credit providers will increase access to finance in next five years

Alternative lending is set to stay and significantly shake up the banking market, according to the world’s leading credit experts. But news from the University of Edinburgh Business School’s biennial Credit Risk and Credit Scoring Conference paints a positive picture for both business and personal borrowers.

In a survey of 200 global conference delegates, from 40 countries, three quarters (75%) of experts questioned felt alternative lenders – such as Zopa and other peer-to-peer lenders – posed a real threat to banks and traditional lenders, with 19% believing them to be a ‘big threat’.

However, leading credit analysts appeared to welcome the challengers. More than half (55%) felt they will make the market for finance more competitive, while 53% believed alternative lending models are likely to increase access to finance in the next 5 years.

But experts caution the new lenders’ models are not without potential risks. 73% thought there are dangers in the methods the new crop of alternative lenders are using to decide who to lend to and how much to lend.  Around a quarter (26%) stated alternative lenders are relaxing controls on lending too much, and the same proportion felt these companies could be circumventing regulations in order to operate. One in five of those questioned (20%) thought the newer lenders may be more open to fraud.

The experts were broadly optimistic about the impact of the new breed of challenger brands for consumers and small businesses, with nearly half (48%) believing credit will become more available in the country they live in during the next six months. However, nearly three quarters of respondents (73%) believed financial stability can be improved by keeping lending criteria as they are, or tightening controls.

Jonathan Crook, Director of the Credit Research Centre at the University of Edinburgh Business School, commented: “The strong growth of alternative lenders over recent years shows no signs of abating, and the view of our expert delegation was that traditional banks need to adapt to keep up with this new, nimble market – and fast. In a market where a small difference to an interest rate can make all the difference in attracting a good customer’s business, banks that don’t push ahead with technological advancements in the way that newer challengers are could really begin to suffer.”

“It’s all good news for consumers and small businesses who may be looking for loans, and is actually positive for the market overall – greater competition will encourage innovation in areas such as personalising interest rates for customers.

Professor Jonathan Crook’s work, presented at the conference, included one such innovation in risk modelling. The new intensity model uses a new application of statistical modelling which could enable lenders to more accurately predict likely defaults on loans, potentially reducing the £13.2 billion annual ‘black hole’ that currently exists due to unpaid loans.

Banks using the new system should be able to much more accurately predict which borrowers will miss loan repayments and when, which may enable them to offer ‘tailor-made’ interest rates based on specific past borrowing behaviour and credit risk.

The model suggests borrowers with poor credit scores and histories would pay higher interest while those with a good credit profile should increasingly benefit from lower interest rates as lending institutions begin to compete more vigorously on lending rates.

Global Banking & Finance Review


Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!

By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post