http://www.europeanbusinessreview.com 35of the traditional banks or even of their more technology
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left almost entirely to new start-ups. This is surprising given
the growth of the industry as well as the recurring posi-
tive data on minimal defaults of loans extended via online
platforms. Since 2011, when data was started to be tracked
more closely, crowdfunding in the German real estate
sector has had no noticeable defaults and already success-
fully returned the full principle plus interest on 30% of all
loans granted. A recent study by the Federal Government
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ally high-risk start-up corporate funding segment, the entire
non-performing loans of crowdfunding since inception
remains below 4%.
For the market participants, it is crucial to continuously
offer an easy to use platform, which will allow investors to
have access to a number of projects at attractive returns
with little risk of default. In a low interest rate environment,
such as the EURO-zone presently, this is becoming quickly
an opportunity for retail investors to shift some of their
more liquid savings from a zero-interest paying savings
account to a crowdfunding platform with a positive track
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green projects in energy and real estate opportunities via
its online portal where new projects are constantly offered
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6.5%, run from a few months to over a couple of years
and have not seen a single default. Slowly, its investor base
is expanding while maintaining repeat clients with after-
loan services.
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and the attractive returns via crowdfunding become the
after dinner and pub conversations in Germany, retail
clientswillincreasinglyshifttowardsthisindustryanddrag
theirfriendswiththem.Asa result,traditionalbankswill
undoubtedlysee their saving volumes come underpres-
sureaswellasfeelmargincompetitioninlendingproducts
suchasmortgages.Sofar,it wouldappearthattheestab-
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thestart-upparticipantsarequitehappytostresstheargu-
mentthatthereis presentlyroomforboth – traditional
banks and crowdfunding; an argument that once was put
forward by the combustion engine challenging the horse-
and-cart industry over a century ago.
It is impossible to estimate with certainty when this part
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services. What can be stated with certainty is that the growth
of the crowdfunding industry will not be without risks. A
major default, a corruption scandal or another black swan
event might cast doubt over the entire industry. Nevertheless,
it is certain that the online funding platforms will eventually
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is to be expected that managers from the established banks
will wake up and weigh in heavily with their political cloud to
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mongering. How well the participants stand up to this future
challenge will determine the course of the industry and with
that, the service that the broad public will obtain from its
banks and their disruptors.AbouttheAuthors
Peter Walburg is the CEO and Founder of
GreenVesting. He has more than 30 years of
investment banking and asset management
experience. The economist has worked as an
analyst and portfolio manager for leading inter-
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most recently, at DWS, the asset management subsidiary of
Deutsche Bank.Peter Walburg lives in the Rhine-Main area
and is a member of the German Association for Financial
Analysis and Asset Management e.V. (DVFA). As a portfolio
manager, he was a member of the Euro Debt Market
Association (AMTE) and the International Commission of
Standardisationof CorporateBonds.
Dr Boris N. Liedtke is the Distinguished
Executive Fellow at INSEAD Emerging Markets
Institute and has over twenty years experience
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largest bank by assets in Luxembourg and
board member for Operations at the largest German fund
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trade as well as having received his PhD from the London
School of Economics for the publication of Embracing a
Dictatorship by MacMillan.A new business disruption is already well under way in
revolutionising the industry at a time when they have barely
come to grips with the last technology revolution.