Alternative finance has seemingly burst on the scene in recent years. The movement has picked up momentum in a major way, but where did the ideas of alternative finance come from, and why have they had such a strong impact on the financial world? Here’s a look back at the history of alternative finance.
The basic idea of alternative financing is a simple one: customers should have alternative options for financial services outside of traditional banks and their high regulations and low approval rates. We have found examples of alternative finance dating back hundreds of years. Irishman Jonathan Swift influenced the Irish Loan Fund way back in the 1700s. Swift, who some have called the “father of microcredit,” established the fund to provide loans to poor rural families who had no credit history and very little collateral. The Irish Loan Fund would make small loans of 5 to 10 pounds and require weekly repayments of as little as 2 shillings at a time. Swift also required each borrower to have two neighbors as “co-signers” that would guarantee the loan if payments were missed. Swift recognized that, just because many of these people didn’t fit the mold of traditional “credit-worthy” borrowers, the vast majority of them were honest, hard-working people that would make their payments on time. These people needed financial services and he opened up a world of financial freedom to them outside of the traditional financial framework at the time. Another powerful example of alternative finance in history involves The Statue of Liberty. Crowdfunding involves pooling the capital of a number of small investors to reach a large fundraising goal. There’s no telling how far back this practice goes, but thanks to Joseph Pulitzer, crowdfunding is responsible for one of the most iconic American monuments: the Statue of Liberty. It’s a common bit of U.S. trivia that the Statue of Liberty was a gift from France, but apparently the pedestal on which it stands on Liberty Island was not part of the deal. When the construction of the pedestal ran into funding issues, Pulitzer stepped in and launched a 19th-century version of a crowdfunding campaign. Pulitzer made his case for donations to the project via his newspaper, the New York World, back in 1885. Pulitzer’s drive raised more than $100,000 in six months from more than 125,000 contributors, many of which gave $1 or less to the cause. However, the efforts demonstrated the combined power of a large group of small investors.
Technology has been one of the reasons alternative finance has been able to come alive in the modern era. The Internet Age has made it possible for fintech companies to compete with large banks better than any other time in history. Alternative finance companies, such as marketplace lenders, Zopa (2004) and OnDeck Capital (2006) began popping up in the early 2000s. However, the single biggest driver of this alternative finance wave is likely the Financial Crisis of 2008. Much of the big banks’ success has been based on their sterling reputations for security and reliability. Even today, banking executives believe that “reputation for stability” is their greatest strength when competing against new Fintech rivals.
Irresponsible subprime lending practices and risky decision-making put the entire U.S. financial system at risk when the housing bubble burst, and American taxpayers had to come in with massive multi-billion dollar bailouts for the big banks just to keep them in business. The reputation of big banks took a huge hit, and many disillusioned customers started seriously looking for alternative options for the first time.
Alternative finance has now established a firm foothold in the financial world. U.S. marketplace lenders generated $6.6 billion in loans in 2014, and the European alternative finance market reached $3.9 billion in size last year. Not only are these large numbers, the growth rates are staggering. The U.S. total in 2014 represented a 128% jump over 2013’s total, and the European number was up 144% year-over-year. It may seem like alternative finance has come out of nowhere in recent years, but a look back on history shows that the underlying principles of alternative finance have been around for centuries, and their power has been repeatedly demonstrated over time. Modern technology has allowed the benefits of alternative finance to be available globally for the very first time, and thousands of banking customers are already taking advantage of the opportunity.
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NEW YORK, NY, March 15, 2022 -- Even Financial ("Even"), the category-leading embedded finance marketplace and independently managed subsidiary of MoneyLion, Inc. (NYSE: ML), has announced a new partnership with Tally, a leading financial automation company, to include the company's low-interest credit offerings on its platform.
"Tally has built a powerful tech-enabled system to help people solve one of the biggest financial problems today: paying off credit card debt," said Phill Rosen, Founder and CEO of Even. "We're thrilled to welcome Tally's line of credit offerings to Even's unparalleled network of financial services providers."
Tally is designed to help its members pay off their debt faster and save them money on interest and late fees. Members can lower their monthly payment with Tally's lower-interest line of credit, if eligible. Typically, at least a 580 FICO score is needed. Tally's system is customized to save people as much money as possible.
"Americans today owe nearly $1 trillion in credit card debt. We know from our research that many want to pay down their debt but struggle to get started. That's where Tally comes in," said Jason Huynh, VP of Credit, Analytics & Operations at Tally. "Our system combines financial automation with a low-interest line of credit to give people the help they need to get on track to pay off their credit card debt for good. We're thrilled that our partnership with Even will allow Tally to help even more people."
The launch of Tally on the Even platform enables consumers to get matched with Tally's custom, low-interest line of credit accounts of up to $25,000 in just a few minutes. After getting matched, eligible consumers complete the process through the Tally app. There are no out-of-pocket costs.
Tally is the latest partner to join the Even marketplace, a growing network of over 400 financial services partners and 500 channel partners covering a breadth of financial services including loans, credit cards, mortgages, savings, and insurance products. Even's marketplace technology enables any company to add financial products to its business, with full compliance and security, at scale.
About Even Financial
Even digitally connects and matches consumers with real-time, personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints through its marketplace technology. Even's infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial services providers (such as SoFi) and channel partners (such as TransUnion) via its industry-leading API and embedded finance marketplaces. Even enables any company to add financial products to its business, with full compliance and security at scale. Even was named one of "America's Best Startup Employers'' by Forbes for 2021 and was named to the 2021 Deloitte Technology Fast 500, which recognizes the fastest growing tech companies in the world. Learn more at www.evenfinancial.com.
Tally is a consumer financial tech company pioneering full-service financial automation to help people save money, pay down their debt and reach their goals sooner. Founded in 2015, the company built the first fully automated debt manager to help put billions of dollars back in people's pockets. In 2021, Tally was named to Fast Company's Most Innovative Companies list and to Quartz's Best Companies for Remote Workers. Previously, Tally made Forbes' Next Billion Dollar Startup list, Forbes' Fintech 50 list, and the app won Real Simple's Smart Money award. Learn more at meettally.com.
NEW YORK, NY, April 19, 2022 -- Even Financial (“Even”), the category-leading embedded finance marketplace and independent subsidiary of MoneyLion, Inc. (NYSE: ML), has announced it has now facilitated over $5 billion in consumer credit, as of March 2022. Leveraging machine learning and advanced data science, Even solves a significant pain point in financial services customer acquisition by seamlessly bridging financial service providers and channel partners via its industry-leading API and embedded finance marketplaces.
“Surpassing $5 billion in consumer credit facilitated through our marketplace is an enormous achievement for Even as we continue to help build the future of finance technology,” said Phill Rosen, Founder and Chief Executive Officer. “Access to credit has long been a challenge for many hard-working Americans, and we are dedicated to alleviating this issue by providing consumers personalized financial services offers that meet their needs, when they need it most. Reaching the $5 billion milestone reaffirms that our mission is driving significant value for both consumers and our partners."
Even has grown its embedded finance marketplace offerings beyond loans to cover a breadth of additional financial services including credit cards, mortgages, savings, and insurance products. Within loans, Even offers the largest network of premium, connected loan providers - across a wide array of products including unsecured personal loans, secured personal loans, line of credit, student loan refinancing, and auto loan refinancing. Leading financial services providers, such as LendingClub and SoFi, partner with Even to reach qualified consumers searching for loans, benefiting from Even’s unparalleled network and native integrations.
The company has continued its rapid growth trajectory in 2022, growing its network to include over 400 financial services partners and 500 channel partners. Even's marketplace technology enables any company to add financial products to its business, with full compliance and security at scale. Earlier this year, Even announced the close of its acquisition by MoneyLion, the award-winning digital financial platform, which will continue to advance their combined efforts of providing financial access and advice to hard working Americans.
About Even Financial
Even digitally connects and matches consumers with real-time, personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints through its marketplace technology. Even's infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial services providers (such as SoFi) and channel partners (such as TransUnion) via its industry-leading API and embedded finance marketplaces. Even enables any company to add financial products to its business, with full compliance and security at scale. Even was named one of "America's Best Startup Employers'' by Forbes for 2022 and was named to the 2021 Deloitte Technology Fast 500, which recognizes the fastest growing tech companies in the world. Learn more at evenfinancial.com.