“Alternative financing,” “marketplace lending,” “crowdfunding” -- these buzzwords are here to stay, so we think it’s time to define them. As these financial products have grown in popularity, the awareness of how vast this landscape stretches has remained flat. Here’s a breakdown of what these terms mean and the countless opportunities they provide.
What is alternative finance?
The alternative finance revolution came about because the banking industry tightened its lending practices after the Financial Crisis. Unfortunately, demand for loans during the post-crisis economic recovery exploded, and borrowers were forced to start looking for alternatives to traditional financing. Marketplace lending, crowdfunding, and alternative investing are just three examples of modern products and services that technology and innovation have now made available to customers for the first time.
Marketplace lending involves the use of online platforms to obtain loans from sources other than traditional banks. Marketplace lending directly connects potential borrowers with potential lenders online instead of the typical trip to the local bank to apply for a loan. There are marketplace lending platforms geared toward consumers (Prosper, Avant, Upstart) as well as platforms focused on small business (Kabbage, LendingClub, On Deck). In addition to marketplace lending, another new source of alternative finance is crowdfunding. Crowdfunding involves pooling the capital of a number of small investors to reach a fundraising goal. Borrowers can use crowdfunding sites such as Indiegogo, Kickstarter and EquityNet to fund anything from weddings to home improvements to small business ideas.
Alternative investing: Motifs, robo-advisors and more
Alternative finance is not all about lending. In recent years, a number of new non-traditional investment opportunities have sprung up as well. One of these new alternative investment strategies is motif investing. The popularity of ETFs has exploded in the past decade, and the company Motif Investing takes the idea of an ETF one step further. Like ETFs, “motifs” are collections of stocks that represent a common theme. However, unlike ETFs, Motif Investing customers can hand-select their own basket of up to 30 stocks for each motif. In that sense, motifs are like homemade ETFs. Robo-advisors are another modern alternative spin on traditional financial advisors. Platforms like Betterment and Wealthfront offer customers automated money management services, including the use of algorithm-based trading advice. Robo-advisors typically offer customers low-cost financial advice by eliminating the middle man and providing customers direct access to the same statistics that human financial advisors typically use to make investment decisions. With robo-advisors, modern investors no longer have to pay exorbitant fees for the “human touch.” Robo-advisors use the same underlying market principles that human financial advisors use.
Perhaps no innovation sums up the spirit of the alternative financing revolution more than neo-banks. Neo-banks are a new breed of banks that lack physical brick-and-mortar branches and instead offer mobile and technology-centric banking services to modern customers. Banking is done via mobile phones or local ATMs, and the savings that the neo-banks log by choosing not to operate branch locations can be passed on to the customer in the form of lower fees or invested in superior digital support and 24/7 customer service. Top neo-banks are all FDIC insured and include names like Moven, Simple and GoBank.
Doing better than the status quo
The terminology of alternative finance can be confusing at first, but the ideas behind it are elegantly simple. The simplest idea of all is the driving force behind all alternative finance ideas: doing better than the status quo. The Internet and mobile age has ushered in the first major challenge to the traditional big-bank model. With all the modern alternatives out there, why should bank customers be satisfied with the way things have always been done?
Disclaimer: The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the suitability of any Even Financial product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any information or statistical data sourced by Even Financial through hyperlinks, from third-party websites, are provided for informational purposes only. While Even Financial finds these sources to be accurate, it does not endorse or guarantee any third-party content.
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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.