Cambridge AltFi/FinTech Study Offers Snapshot of Fast-Moving Global Sector

Today we offer a snapshot of the constantly fluctuating world of FinTechfrom our friends at The Cambridge Centre for Alternative Finance (CCAF), which has just completed an extensive survey, along with its partners the World Bank and the World Economic Forum. Crowdfundinsider reports on a presentation this week on a study reviewing the COVID-19 pandemic and its impact on the Fintech industry.

The survey was launched several months back when it became clear that COVID-19 was quickly becoming a global health crisis compelling lockdowns and remote work in an attempt to slow the spread of the highly infectious disease. Fintech platforms have been dramatically impacted by the coronavirus with many experiencing accelerated growth as part of the overall digital transformation occurring in financial services. The Global Covid-19 Fintech Market Rapid Assessment Study surveyed approximately 1400 Fintechs operating in a diverse range of financial services to gauge how the pandemic has impacted digital financial services firms. The CCAF survey held three specific goals:

  • First, the research looked at the impact of the global pandemic on Fintech markets – understanding how Fintechs are performing financially based on their operating model and jurisdiction among other criteria
  • Second, they studied the responses of these organizations in shifting their products and operations throughout the pandemic –  seeking to understand how these companies are dealing with remote working measures and a more digitized economy
  • Finally, to identify issues Fintechs are facing on a regulatory front

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.

So here’s our guide to the process:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.

Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.



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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.