Misys to enable banks to get in on crowdlending
New module for Misys banking systems will allow banks to launch crowdlending services
Banking software specialist Misys has launched a module for its banking system which will allow retail and corporate banks to participate in the crowdlending trend.
The Misys FusionBanking CrowdLending module will allow banks to set up and run their own crowd lending solutions, to directly match borrowers and lenders including small businesses and individuals and peer-to-peer lending, outside of traditional loan finance channels.
Marketplace lending could account for $150 billion to $490 billion globally by 2020, according to estimates from Morgan Stanley.
FusionBanking CrowdLending provides a fully integrated, white-label platform which enables banks to bring lenders, including individuals, asset managers and banks, together with borrowers of all sizes, innovating and digitalising traditional lending. By embedding crowdlending in the overall credit lifecycle, a bank can maintain and expand its client base, no longer having to turn away those they otherwise wouldn't fund. At the same time, loans are originated off balance sheet to diversify risk.
For borrowers, FusionBanking CrowdLending provides easy access to alternative funding through a trusted bank platform, with no additional sign up processes required. In-house processing affords cost efficiencies which deliver borrowers competitive rates. Users also benefit from their bank's customer network of lenders and investors, for fast loan origination. Investors benefit from established credit risk processes and bank infrastructure, to minimise potential risk.
"Alternative finance has made its mark," said Simon Paris, president at Misys. "Overall loan volumes are on the up, but a growing and increasingly relevant slice of the market is now being processed by independent P2P providers. With traditional lending vehicles also under pressure from marketplace lenders, banks risk missing out. Our approach enables banks to capture more of the opportunities in this market, and to de-risk, disrupt and quickly grow in this competitive space. Crowdlending with Misys is a digital leap that banks can make now and it is a leap that could see them play a significant role in boosting SME funding - an area that has been underserved to date."
James O'Neill, senior analyst for Banking at Celent added: "A key limitation to the long-term growth of the marketplace lending sector is the lack of industry standards across the various platforms competing in the market, and as a result important metrics like credit quality and collection policies are not uniformly administered across competitors. FusionBanking CrowdLending is thus a welcome addition to the marketplace lending scene as it allows traditional banks to contribute their expertise in credit management to borrowers and lenders alike. Additionally, unlike some marketplace lending platform providers who continue to operate at a loss, FusionBanking CrowdLending will enable bank-administered platforms to provide long-term financial stability to the marketplace lending sector, allowing for the acceleration of innovation in the future while plugging a funding gap that currently exists for SMEs."