The new entity – an international, interdisciplinary academic research institute – will adopt an impressively broad remit. Its mission is to scrutinize with academic rigour a vast range of financial channels and instruments – all of which sit outside of the traditional financial services sphere. Exemplar areas of interest include peer-to-peer lending and crowdfunding – but also include third-party payment platforms, the infamous SME mini-bonds, private placements and crypto-currencies. In other words, the Centre promises to be a thriving hub of financial disruption.
This is not Cambridge’s first foray into the alternative finance space. In early November last year, in conjunction with the innovation charity Nesta, the University delivered the “Understanding Alternative Finance” report – a then-widely lauded snapshot of the scale and impact of the industry.
The rampant growth of the alternative finance sector – in terms of international expansion, transactional flows, product types, customer bases, customers types and so on – is a narrative story that the majority of industry observers are familiar with. However, the very swiftness with which many of the leading companies have emerged has meant that some of these businesses lack the necessary infrastructure to the collect and collate internal data. As the Cambridge Centre for Alternative Finance puts it:
“Our knowledge of what various forms of alternative finance are, or how they are functioning, substituting or complementing existing financial intermediaries, is sparse. There is a growing need, and a call from academics, policymakers, regulators and industry alike, to underpin these shifts with fundamental knowledge.”
A cursory glance at the Centre’s "About Us" page will tell you that its plans for information collection are immensely ambitious. The newly-formed entity intends to gather both the hard and soft varieties of data. We’ve relayed a series of the questions that the Center will look to ask below:
Why do funders invest, lend or donate through alternative finance channels?
How do these channels compare with traditional ones?
Is alternative finance expanding the existing pool of capital/credits or merely rechannelling it?
Are alternative finance developments therefore a threat or an opportunity for incumbent financial institutions?
What is the socio-economic impact of alternative finance in terms of job creation, revenue generation and community engagement at local, regional and national levels?
How will public policy and regulations affect the trajectories of alternative finance?
Will the acquisition of more behavioural data about individuals introduce new security and privacy issues?
Resting at the heart of the Cambridge Centre for Alternative Finance is the belief that the global transition to alternative financial structures is not a fleeting movement, but a decisive shift. The new initiative is looking to position itself at the centre of that shift.
Bryan Zhang, Director of Operations and Policy at the Centre, summarized:
"The Cambridge Centre is forging a cutting-edge, multidisciplinary and collaborative research agenda in all areas of alternative finance. By working with the bourgeoning peer-to-peer lending and crowdfunding industry and other key stakeholders, it aims to have high impact not only on academic thought leadership, but also on policy decision-making and business practice globally."