What next for finance?

The commercial finance landscape has drastically changed in the last 16 years, predominantly driven by the 07/08 financial crises and the rise of cyber.

But what next? It seems clear that the next phase of the journey will be heavily influenced by technology.

The Bank of England believes the sector is likely to undergo intense change over the coming decade. A report called ‘The Future of Finance’ found that the shift to digitally enabled services and firms is already profound and appears to be accelerating.

The shift from banks to market-based finance is likely to grow further. One of the most interesting things to come out of this report is support for a platform to boost access to finance for small businesses.

Research suggests there is a £22bn funding gap for SMEs in the UK. This platform would help small businesses harness the power of their data by developing the concept of a portable credit file, to give greater access to more diverse and competitive financing options.

Cutting across all of this is blockchain and distributed ledger technology, potentially the best and most applicable feature to come out of cryptocurrency.

Global banks are already working out how the technology can be used to improve cumbersome processes like trade finance.

In one example, the trade process for $100,000 of cheese and butter, from the issuing of the letter of credit to the approval of it, took less than four hours, drastically down from the traditional time of seven to 10 days.

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