Footnote 5 Moreover, emphasis has been laid on encouraging innovative, tech-based firms that provide alternative financial services, disrupting the more traditional banking business on the one hand, and providing benefits for consumers on the other. The UK Financial Conduct Authority (FCA) has recently emphasised the importance of promoting market-based forms of financial intermediation in order to alleviate the burden traditionally borne by commercial banks. Footnote 3 While the UK is currently the third P2P market in the world behind the USA and China, Footnote 4 its experience provides some useful directions, especially with respect to the regulatory approach towards alternative finance. In order to address these issues, this article focuses on the recent growth of the FinTech industry in the UK, and specifically on the most common form of FinTech intermediation, which takes place on P2P (peer-to-peer) lending platforms. Galbraith, of whether this is simply another wave of financial innovation, which like the most recent ones will result in a speculative fever and in instability, or whether it can provide some long-term benefits to the real economy. It then addresses the question enshrined in the above quote by J. In particular, this article is focused on questioning the nature of the FinTech phenomenon in relation to the channels of financial intermediation that it elicits. It does so by reflecting on the trajectory of this process and its likely consequences in the short and medium term. This article takes a step back from the hype Footnote 2 associated with the recent boom of FinTech in the UK. Ensuing problems related to the best way to regulate these new channels of financial intermediation lead to critically evaluate the initiatives launched by the UK FCA, initially under the Innovation Hub, and more recently under the consultation for a new regulatory framework. Furthermore, questions of systemic risk inevitably resurface in these types of transactions. Interestingly, the emergence of P2P securitisation raises a number of regulatory and policy questions, because longer intermediation chains typical of securitisation may well defy the social and economic purposes under which the idea of P2P developed. The question then is to assess the policy and regulatory approach that is relevant to UK P2P platforms. In doing that, this study focuses on the structure and operation of the main UK platforms, recognising that while some are effectively banks that adopt a technology-based business model, many platforms operate under the P2P business model. This paper maps the development of FinTech lending platforms in the UK and reconceptualises the rationale for their growth. Much has been written on the rise of FinTech in recent years, but there is still insufficient clarity about the benefits that this phenomenon is bringing to the real economy and the potential risks that can arise from its growth. The reluctance and inability of mainstream banks in the post-crisis years to provide credit facilities to the real economy, most critically to start-ups and small and medium-sized enterprises, propelled the latest wave of financial innovation, this time under the guise of FinTech. The collapse of the global financial industry in 2008 and the subsequent decay of most Western economies into a period of prolonged economic stagnation have represented a springboard for the progressive growth of alternative channels of financial intermediation.
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