Michael Treskow, of Accel Partners, was interviewed this week on the “Rise of Crowdfunding” where he got a chance to defend his point of view as his firm invests in new finance. Accel has placed bets on Prosper, Funding Circle and others associated with the “sharing economy”. So far these bets have worked out pretty well for them. Asked by CNBC as to what stops the banks from doing the exact same thing, with way more capital behind them? Treskow explained;
“The banks are facing a bit of a perfect storm. On one-half, they have regulatory pressures on them since you push them away from SMB [SME] lending that becomes not a very interesting place for them. They have the overhead of the branch network… And they have legacy technology. So compare that to a Funding Circle that is virtual and does not operate any branches, and that uses the newest technology to make better and faster decisions, and that not only makes it difficult for banks to go in the same direction they don’t actually want to do it.”
Treskow makes mention of Funding Circle’s relationship with Santander that allows the bank to provide leads for the direct lender. This is one strategy for traditional high street banks to mitigate their operational risk.
Queried about the investor side of the equation, Treskow explained that there are different regulatory requirements in each country (IE the US is way more stringent). In the UK you can start with £50 to £100 thus “democratizing access to the asset class”.
See the interview below.
