The transition of JP Morgan Chase into alternative financing is in progress. This was made public by Jamie Diamond, chairman and CEO of the company, during a panel discussion in New York, on Tuesday last week. JP Morgan Chase joins other mainstream banking companies that have been steadily joining the alternative finance industry. The company will form a partnership with an existing industry operator. Jamie also highlighted a number of big companies that have been joining the alternative financing industry through different programs. ING recently launched crowdfunding services to offer financing alternatives for small and medium size enterprises (SMEs) in Benelux. The accelerator program provided by Barclays has attracted numerous companies that are now raising capital through crowdfunding. He also said that firms such as Wells Fargo, Bank of America, Royal Bank of Canada and Citibank are very close to joining the industry.
Based on the recent growth and integration of financing options such as alternative finance, angel investing and venture capital, among others, funding will soon be available to all the 6 million SMEs in the U.S. at their local bank branches. Opening more funding doors has brought about dramatic change in the U.S.’s economy by creating more jobs and increasing revenue. The number of investors has also increased from 8.5 million to over 200 million after non-accredited investors were allowed to start investing in SMEs and startup companies. In addition, lowering investing barriers have created more funding opportunities through channels such as the internet and social media.
It has been just three years since equity crowdfunding started being used as a funding option in the U.S., and it is still growing at an unprecedented speed. This surge is happening amidst numerous regulatory changes. It therefore implies that if retail banks join the alternative finance industry, the growth of the industry will even be more. The banks have comprehensive marketing knowledge and know how to fight for SMEs. They have the necessary infrastructure and connections that will help them drive spur on the industry’s expansion.