The coronavirus pandemic has halted M&A activity, but it could prove positive for longer-term risk management practices
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Research
CCAF Releases 2nd Global Alternative Finance Benchmarking Data and Total Fintech Volumes
Crowdfund Insider | | Jun 30, 2021
The Cambridge Centre for Alternative Finance (CCAF) has just released its most recent report providing data on the global alternative finance industry. According to the 2nd Global Alternative Finance Benchmarking Report, this sector of Fintech has grown dramatically – with a caveat: you must exclude the data coming from China.
CCAF defines alternative finance as digital lending and digital capital raising like P2P/marketplace lending as well as investment crowdfunding. Effectively, this sector of Fintech is for online capital formation for both individuals as well as businesses. CCAF also rolls in charity/rewards platforms into the equation.
CCAF is the leading data and research entity covering the global Fintech ecosystem providing much-needed perspective and insight into digital finance. Its benchmarking report is widely referenced and utilized by policymakers around the world to help guide decisions in a highly regulated industry.
See: BIS Research: CBDCs beyond borders: results from a survey of central banks
According to the report, China, once the largest alternative finance market in the world, now barely registers having gone to nearly zero. This is due to a regulatory and policy shift away from this sector of Fintech.
As many people know, China dominated the global online alternative finance market up to around 2018. In 2017, China accounted for 86% of the total market largely from peer-to-peer lending platforms that once numbered in the thousands. The rapid rise of these online lenders was joined by profound reports of fraud. The rapid rise was then followed by a bit of a bust as regulators caught up with the booming market. In 2019, the Chinese market accounted for almost half (48%) of the global volume. In 2020, China accounted for a mere 1% of global activity.
CCAF states that if Chinese volumes are included in the analysis, the total global market volume decreased, falling 42% in 2019 and another 35% in 2020. Or from $304.5 billion in 2018 to $176 billion in 2019 and $114 billion in 2020.
See: CCAF Report: Global COVID-19 FinTech Market Rapid Assessment Study
When you exclude the Chinese market the story is dramatically different. CCAF reports that the global online alternative finance market has grown consistently over the past three years. Ex-China, alternative finance grew 3% from 2018 to 2019 or $89 billion to $91 billion. And in 2020, despite COVID-19, the global market volume rose a further 24% year-on-year to reach $113 billion.
CCAF says the Chinese experience represents:
“… a cautionary tale about both the importance of regulation in market development, as well as the substantial implications of both excessively permissive and excessively restrictive regimes. And so, we do ourselves a disservice if we do not exclude this behemoth outlier when evaluating the impact of Fintech activities on a global context in the longer term. Therefore, it is important to examine the global online alternative finance market more holistically by taking into account the drastic decline of the Chinese P2P lending market over the last two years.”
Today, the USA and Canada are the largest regions when it comes to alternative finance. In 202o, this region generated almost $74 billion. The UK follows with $12.6 billion followed by Asia Pacific (APAC) at almost $9 billion (not including China).
See: McKinsey’s Global Banking Annual Review 2020: A test of resilience
Globally, the top ten segments as defined by CCAF in 2020 are as follows:
- P2P/Marketplace Consumer Lending
- Balance Sheet Business Lending
- Balance Sheet Consumer Lending
- P2P/Marketplace Business Lending
- P2P/Marketplace Property Lending
- Balance Sheet Property Lending
- Invoice Trading
- Real estate Crowdfunding
- Donation-based Crowdfunding
- Equity-based Crowdfunding
A Few Highlights from the report
China dominated the global online alternative finance market up until 2018. However, local market developments and regulatory changes have led to a considerable decline in volumes and its global market share. In 2019, the Chinese market accounted for 48% of the global volume, and in 2020 for only 1%. Accordingly, when Chinese volumes are included in our global analysis, total global market volume has notably decreased, falling 42% in 2019 and a further 35% in 2020 – from $304.5 billion in 2018 to $176 billion in 2019 and $114 billion in 2020.
See: China Says It Remains Open to the World, but Wants to Dictate Terms
When we exclude the Chinese market from our analysis, it emerges that global online alternative finance market has grown consistently over the past three years. Global volumes (excluding China) rose by 3% from $89 billion in 2018 to $91 billion in 2019. And in 2020, despite COVID-19, the global market volume rose a further 24% year-on-year to reach $113 billion.
The largest business model globally in 2019, when excluding China, P2P/Marketplace Consumer Lending remained the largest model type, with a total volume of $33.6 billion, accounting for 37% of the total global volume in 2019. In 2020, though still the largest single model, growth slowed down substantially, accounting for a total volume of $34.7 billion, or 31% of global market share.
When considering the banking status of borrowers, on balance, alternative finance activities remain heavily skewed towards catering for those individuals and customers which are already banked. Crowd-led microfinance, unsurprisingly, is the only exception with 72% of clients categorised as unbanked, and 27% as underbanked.
See: New study reveals environmental footprint of internet activities
Surveyed firms have provided information on the gender distribution of both their funders and their fundraisers. Overall, the percentage of female fundraisers has only slightly increased from 37.8% in 2019 to 38.9% in 2020. However, the percentage of female fundraisers of alternative finance activities in four of seven regions increased from 2019 to 2020: APAC (23% to 24%), Europe (26% to 34%), SSA (47% to 54%), and the UK (47% to 59%). However, activities in the US and Canada (55% to 37%), LAC (43% to 22%) and MENA (34% to 30%) all denoted a decline in the percentage of female fundraisers who utilised online alternative finance.
Continue to the full article --> here
Download the 197 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Financial data unbound: The value of open data for individuals and institutions
McKinsey Global Institute | Jun 24, 2021
Economies that embrace data sharing for finance could see GDP gains of between 1 and 5 percent by 2030, with benefits flowing to consumers and financial institutions.
As countries around the world look to ensure rapid recovery once the COVID-19 crisis abates, improved financial services are emerging as a key element to boost growth, raise economic efficiency, and lift productivity. Robust digital financial infrastructure proved its worth during the crisis, helping governments cushion people and businesses from the economic shock of the pandemic. The next frontier is to create an open-data ecosystem for finance.
Already, technological, regulatory, and competitive forces are moving markets toward easier and safer financial data sharing. Open-data initiatives are springing up globally, including the United Kingdom’s Open Banking Implementation Entity, the European Union’s second payment services directive, Australia’s new consumer protection laws, Brazil’s drafting of open data guidelines, and Nigeria’s new Open Technology Foundation (Open Banking Nigeria). In the United States, the Consumer Financial Protection Bureau aims to facilitate a consumer-authorized data-sharing market, while the Financial Data Exchange consortium attempts to promote common, interoperable standards for secure access to financial data. Yet, even as many countries put in place stronger digital financial infrastructure and data-sharing mechanisms, COVID-19 has exposed limitations and gaps in their reach, a theme we explored in earlier research.
See: What is open banking and why hasn’t it come to Canada yet?
This discussion paper from the McKinsey Global Institute (download full text in 36-page PDF) looks at the potential value that could be created—and the key issues that will need to be addressed—by the adoption of open data for finance. We focus on four regions: the European Union, India, the United Kingdom, and the United States.
By open data, we mean the ability to share financial data through a digital ecosystem in a manner that requires limited effort or manipulation. Advantages include more accurate credit risk evaluation and risk-based pricing, improved workforce allocation, better product delivery and customer service, and stronger fraud protection.
Our research identifies seven broad mechanisms through which open financial data can create economic value. Three directly benefit individual and MSME customers: increased access to financial services, greater user convenience, and improved product options. The other four mechanisms directly benefit financial institutions: increased operational efficiency, better fraud protection, improved workforce allocation, and reduced friction in data intermediation.
Our analysis suggests that the boost to the economy from broad adoption of open-data ecosystems could range from about 1 to 1.5 percent of GDP in 2030 in the European Union, the United Kingdom, and the United States, to as much as 4 to 5 percent in India. All market participants benefit, be they institutions or consumers—either individuals or micro-, small-, and medium-sized enterprises (MSMEs)—albeit to varying degrees.
See: Privacy Reform: Back to the Drawing Board For C-11?
Capturing the full value requires both a level of data standardization and a breadth of data sharing that are not yet current in many economies. Indeed, our research suggests that more than half the potential value remains inaccessible, particularly the value that financial institutions could gain directly through greater efficiency and reduced fraud costs. The use of open data raises questions about user consent, data protection, and cybersecurity. But if these issues are addressed, the innovation such ecosystems could enable would be a spur to economic recovery and broader-based prosperity.
Continue to the full article --> here
Download the 32 page PDF discussion paper --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Task Force on Financial Stability: Report release
Brookings Institution and the Initiative on Global Markets at the Chicago Booth School of Business | Jun 29, 2021
For the past year and a half, the Task Force on Financial Stability has been identifying gaps in the financial regulatory architecture and other features of the financial system that make it insufficiently resilient to adverse developments. Co-sponsored by the Hutchins Center at Brookings and the Initiative on Global Markets at the Chicago Booth School of Business, the task force recommends ways to assure that the financial system can support economic growth even after the economy and financial system have been hit with a bad shock.
See: Cyber Risk is the New Threat to Financial Stability
The report focuses on vulnerabilities outside the regulated banking system—the U.S. Treasury market, clearinghouses, open-end mutual funds, and other markets and non-bank financial institutions—because the capital footings and regulation of banks were substantially strengthened after the global financial crisis. It also recommends ways to strengthen the regulatory structure and process.
At this report release event on June 29, the task force co-chairs, Glenn Hubbard and Don Kohn, summarized the task force’s findings and recommendations. Following their presentation, a panel that includes task force members and academic experts on finance discussed the recommendations and underlying financial stability issues.
Continue to the full article --> here
Download the 135 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Financial Health Network Report: Financial Data – The Consumer Perspective
Financial Health Network | Jun 24, 2021
While technology-driven financial products, services, and institutions have the potential to benefit consumers, they can also pose new risks due to the increased availability of financial data. To better understand the consumer perspective on the use of financial data, the Financial Health Network fielded a nationally representative survey.
See: EY Global FinTech Adoption Index finds over half (64%) of global consumers use FinTech
The findings in this report describe consumer understanding of practices in the financial data ecosystem, and consumer preferences on how they would like personal data to be treated. These findings can serve as a guide to both industry stakeholders and policymakers as they seek to build trust and ensure that both practice and policy serve consumers.
Data Portability:
62% of consumers think their bank should be required to share data about them if they direct it to.
Data Privacy:
Approximately 90% of consumers favor an opt-in standard for banks, tech companies, and fintech apps to share data about them.
Data Minimization:
87% of consumers favor data minimization, but only 41% think it is taking place in the market today.
Consumers’ views on data portability, data minimization, and opt-in standards do not vary with political party affiliation.
Continue to the full article --> here
Download the 23 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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A risky picture for mergers and acquisitions?
Raconteur | Sally Whittle | Jun 29, 2021
The coronavirus pandemic has halted M&A activity, but it could prove positive for longer-term risk management practices
The coronavirus crisis has presented organisations with many challenges around mergers and acquisitions but, in the long term, perhaps the lessons of 2020 could reduce risk in M&A. M&A activity started to slow at the beginning of 2020, before coming to a virtual halt in March with the UK in lockdown.
A good company in 2019 would expect to see several interested buyers, but now organisations are having to work harder to get deals off the ground.
“We’ve seen many deals paused or cancelled, and we’re seeing far less cookie-cutter deals,” says Phil Adams, chief executive of GCA Altium investment group. “What this means is we’re having to work harder and use our initiative to create deals and navigate bilateral agreement.”
Greater reliance on data
The vast majority of M&A negotiations are now happening remotely, which means the personality of a management team is less of a factor in transactions. When buyers and sellers get around a table, the charisma of a company founder can be a critical part of the negotiating process.
See: Lawmakers Take Aim at Big Tech with Push for Sweeping Overhaul of Antitrust
In a COVID-19 world, however, we’re seeing more focus on cold numbers, and requests for much more, and more detailed data. “I don’t think this is a bad thing because we are seeing organisations doing better risk assessment because of this trend,” says Andrea Brody, CMO of Riskonnect.
Virtual meetings
Replacing physical meetings with virtual tours and roundtables has been more successful than many people expected, says Riskonnect’s Brody. As such, it seems likely the M&A sector will never return to the old “normal”.
“When you’re doing a deal these days, it’s very focused on data and virtual conversations. I think as people become comfortable with that type of transaction, we will see a fall in the number of physical meetings, even as things go back to normal,” she adds.
“I think we will see an accelerated trend towards more remote transactions, which is a good thing because you’re spending less time flying, and I think people sometimes make better decisions when they’re not swayed by the personalities of the management team.”
Narrowing of Sector Activity
Some sectors have boomed during the pandemic and he expects to see interest in these sectors over the next couple of years.
See: What You Should Know About 2020 Merger and Acquisition Increases
“Sectors like technology are doing very well, and specifically hosting, and any companies with contractual, monthly recurring revenue,” he says. “These businesses will command a premium because they will be in a better place to ride out the downturn.”
While the M&A landscape may look very different after the COVID-19 crisis passes, the key thing for organisations is to take the lessons of 2020 and use them to build resilience in a post-COVID world.
“The companies that are already planning how to come out of the crisis and deal with that new landscape will be the ones that survive and thrive,” says Brody. “This crisis has given many financial services companies the opportunity to really look at their risk management and assessment, and make positive changes.”
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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BIS Research: CBDCs beyond borders: results from a survey of central banks
BIS | Raphael Auer, Codruta Boar, Giulio Cornelli, Jon Frost, Henry Holden and Andreas Wehrli | Jun 24, 2021
CBDCs offer an opportunity to rethink some key features of cross-border payments. Central banks could ease current frictions by factoring an international dimension into their CBDC designs from the outset.
For front-end retail uses, CBDCs could allow for use by non-residents in a jurisdiction, or abroad, if central banks permit this option and the transacting parties agree on using the CBDC as means of payment. Some CBDC designs could allow for transfers that are as frictionless as digital messages. Account-based CBDCs that link balances to identification could bring efficiency while mitigating any key risks that digital cash may otherwise entail (Carstens (2021a)).
See: Stablecoins: What’s old is new again – speech by Christina Segal-Knowles
An alternative option is for various mCBDC arrangements, which are generally focused on wholesale uses. At least three models exist in principle to facilitate cross- border payments in this way, involving successively greater integration and policy coordination.
Our survey finds that central banks are actively considering these cross-border issues around CBDCs. While a slight majority of central banks have not yet come to any firm conclusion on whether non-residents would have access to a (future) domestic CBDC, slightly more than a quarter of respondents say that they would allow such access, and almost 20% would consider this at a later stage. Fewer central banks would allow for use abroad by non-residents. Central banks are aware of the risks entailed by such cross-border usage of their own CBDC, or usage in their jurisdiction of foreign CBDCs. Tax avoidance, loss of oversight and a range of concerns associated with “digital dollarisation” were mentioned prominently in the survey responses. While most central banks do not currently report restrictions on the use of foreign currencies for transactions in their jurisdiction, about a third may reconsider such restrictions if a foreign CBDC (or stablecoin or cryptocurrency) were to become widely used. Nonetheless, where a central bank is considering only retail or only wholesale CBDC, they frequently responded that aspects covering the other area are undecided.
On the wholesale front, the survey results show that central banks are considering a variety of mCBDC arrangements. Some central banks are even contemplating multiple CBDCs run on a single system. Meanwhile, some central banks are considering novel operational roles for the central bank in FX conversion. Overall, the responses show active consideration of cross-border issues and a strong interest in international peer learning.
See: Should the State or the Market Provide Digital Currency?
This brief overview has laid out a number of open issues for both policy and economic research. In particular, the discussion of both retail and wholesale use underscores the importance of early policy coordination on CBDC design, so as to promote coherence and to reduce future policy spillovers. From a research perspective, there is a clear need to better understand how CBDCs compare with other potential policy interventions, such as retail fast payment systems, and what the longer-term implications of issuance for the international monetary system may be. Beyond currency substitution, the broader macroeconomic implications of CBDCs also need to be understood, not least for monetary policy transmission and cross- border capital flows. Further research on CBDC design could help to inform efforts to reduce the risk of international spillovers. All these are relevant areas where research and policy can fruitfully enrich one another.
Download the full 22 page PDF report --> here
BIS | Jun 23, 2021
CBDCs: an opportunity for the monetary system
Key takeaways
• Central bank digital currencies (CBDCs) offer in digital form the unique advantages of central bank money: settlement finality, liquidity and integrity. They are an advanced representation of money for the digital economy.
• Digital money should be designed with the public interest in mind. Like the latest generation of instant retail payment systems, retail CBDCs could ensure open payment platforms and a competitive level playing field that is conducive to innovation.
See: BIS digital currency paper predicts money will be unbundled
• The ultimate benefits of adopting a new payment technology will depend on the competitive structure of the underlying payment system and data governance arrangements. The same technology that can encourage a virtuous circle of greater access, lower costs and better services might equally induce a vicious circle of data silos, market power and anti-competitive practices. CBDCs and open platforms are the most conducive to a virtuous circle.
• CBDCs built on digital identification could improve cross-border payments, and limit the risks of currency substitution. Multi-CBDC arrangements could surmount the hurdles of sharing digital IDs across borders, but will require international cooperation.
Download the 31 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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New report explores questions of responsible AI innovation in financial services
The Alan Turing Institute | Joanna Dungate | Jun 14, 2021
A new report published today (Monday 14 June 2021): AI in Financial Services explores the use of artificial intelligence (AI) and the importance of responsible innovation in the financial services sector.
The report was commissioned by the Financial Conduct Authority (FCA) as part of The Alan Turing Institute’s public policy programme collaboration with the FCA and has been launched at the accompanying CogX session. The authors hope it will provide stakeholders in the sector with the understanding needed to navigate the evolving AI landscape in pursuit of responsible and socially beneficial innovation.
On-demand Video: FFCON21: May 11 AI and the future of innovation in financial services
AI is already having a substantial impact on the delivery of financial services and its role will increase in the years to come. The adoption of AI in financial services is underpinned by three distinct elements of innovation: machine learning (ML), non-traditional data, and automation. Each of these elements can enable significant benefits but also pose challenges that give rise to potential harms.
The new report provides an introduction to AI, discusses general challenges and guiding principles for the responsible adoption of AI, and maps out potential benefits and harms associated with the use of AI in financial services. Crucially, it also examines the fundamental role of AI transparency in pursuing responsible innovation.
Continue to the full article --> here
Download the 79 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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