Finance and Society panel debate: Innovative solutions – alternative finance for SMEs

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Alternative models such as crowdfunding are creating “a new entrepreneurial journey” for thousands of businesses which are eschewing traditional finance.

In the wake of continued scandals across the banking industry, guests at our inaugural Finance and Society lecture last night heard that the world had a unique opportunity to “completely reshape” the future of banking.

One of our speakers, Barry James, founder and CEO of The Crowd Data Center and The Crowdfunding Center, even questioned whether banks were needed at all. “If you were designing a world today you would not design it with a bank.” Our lecture was held on the very day that it was revealed that six global banks had agreed to pay more than $5.6bn to settle allegations that they had rigged foreign exchange markets.
Peter Folkman, Honorary Professor at MBS, said the “tectonic plates” of the banking world were shifting fast. “The integrated banking model has failed.”

Our lecture, which examined alternative and ethically responsible finance for SMEs, heard that the availability of credit to SMEs in the UK was still problematic, despite the massive quantitative easing programme. Ismail Erturk, Senior Lecturer in Banking at MBS, said although credit levels had increased to larger businesses, lending to smaller companies was still falling.

Asked whether education could play more of a role in helping prevent future scandals, Erturk said we had to be careful about how much we should expect from education. “The central issue remains how banks are packaging their products and how that is regulated at that level. Education helps, but the key issue is that bank business models are based on marketing and selling to make a profit.”

Other speakers at the event included Vernon Hill, Chairman of Metro Bank, and Alison Loveday, Managing Partner of law firm Berg.

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