ECF, P2P serve underserved segments — SC
KUALA LUMPUR: Equity crowdfunding (ECF) and peer-to-peer (P2P) lending do not pose a threat to financial institutions but instead help complement them to serve the needs of underserved segments, a conference was told yesterday.
Securities Commission Malaysia (SC) executive director Chin Wei Min said there is plenty of room for the regulators to learn and understand about the regulatory philosophy for ECF and P2P.
“We are still learning and continuing to look at the industry closely,” he said. “When necessary, we will revise the guidelines as we go with the industry.”
Speaking in a panel discussion at the Finnovasia Conference, Chin said P2P and ECF were mainly needed to meet the needs of underserved segments, especially the small and medium enterprises (SMEs).
He added that about 40% of the investors in the ECF space are made of the younger generation.
“The key point is to make the pie bigger. From a finance perspective, I think we still have some headroom both for the banks and financial institutions and fintech players.
“I think we are not at the saturation point where one replaces the other. I believe that with fintech and banks working together, it will help meet the needs of these underserved segments,” he said.
Another speaker during the discussion, Funding Societies co-founder Kelvin Teo, said Malaysia is at the beginning of the P2P evolution.
“Malaysia is still at the very start of this evolution and I believe it will be unfolded very slowly and we will also see the whole crowdfunding industry go through a really big transformation,” he said.
He spoke about the advantage of P2P lending, which is faster and could be done via the Internet.
“Unlike the conventional banks that focused on loans with collateral and took a longer time, P2P lending focuses on the cash flow of the SMEs to meet the financing needs,” he said.
Teo also stressed that regulations are fundamentally important for the success of the P2P financing industry, although there needs to be flexibility so as not to restrict the innovation in the industry.
On this, both Chin and Teo agreed that transparency and disclosure represent one of the most important components of regulations so as to create confidence in the P2P and ECF platforms.
Source: The Edge Markets