Crowdfunding: Golden Opportunity for Banks or Paradox

Thanks for this. I'd think the banks would like to get involved, but I no longer work for Lloyds Bank so I don't know if and when they'd like to be involved. 

If you think an SME business making a free redesigned verion video like this: https://youtu.be/mO0ORNtM36U to attract crowd funding would work, let me know what specifics should be in the video to get better crowd funding results and more investors to a business? 

Thank you 

I remember reading some article on Finextra saying banks are getting involved in online crowdfunding companies either as lender or as investor or both. As of now, online crowdfunding seems to be focused on subprime, thin file and no file categories. Since banks are currently shunning this "bottom feeder" segment of the market, there's no question of disruption, as of now.

Some have hypothesized that, as online crowdfunding gains traction in the bottom feeder market, even prime and ultraprime segments - currently the mainstay of banks - will choose online crowdfunding options over banks when they need a loan (despite the former’s higher interest rates and just because of their superior CX). If and when that happens - and VC-funded online crowdfunding companies are still around to take advantage  of it and get their recovery act in place by then - disruption will happen.

Thanks for your comments, Dwight and Ketharaman. 

Rather than getting involved as lenders or investors, banks could take the role of platform. Instead, they take a fee for facilitating the arrangement. Thus taking none of the risk but a steady and immediate revenue from this segment of the market. Would that expedite some of those risks and allow banks to be relevant?

@HamzaAbu-Musa:

I'm no banking industry corporate strategist but I think it's very smart for banks to continue in the current mode of keeping online P2P companies at arms length. For several reasons, they should avoid ownership of such companies: (1) If and when loans go delinquent, it's very easy for an asset-light VC-funded fintech company to leave investors high-and-dry. It's not so easy for asset-strong banks to do the same. (2) Not sure if banks can ringfence online P2P business from their core business. Even assuming they can, why should they bother to take the risk of reputation loss when they wash their hands off delinquent loans when online P2P volumes are extremely miniscule at this point? (A Tier-1 bank does more volumes in one day than what LC has done in its entire lifetime nearing 10 years).