Tailwind Crowd Blog

How Banks can benefit from Crowdfunding

Posted by Tailwind Crowd Team on Jun 7, 2015 11:43:00 AM


Over recent years, it has become clear that start-up companies and small businesses struggle more and more to borrow money from commercial banks. While some consider crowdfunding a disruptive innovation amongst the finance sector, it’s vital to recognise the synergies that can be formed in order to keep a balance in the launch and development of new businesses.


Crowdfunding provides a solution to bridge the gap between small companies and commercial banks and should not be considered a threat to the financial sector in any way, shape or form! In fact, it should be considered an effective financial intermediary that can link the two together and result in an increase in business for banks and CF platforms alike.


“Funding Circle, the online "peer-to-peer" SME lender, has defended controversial talks with Santander which could see the bank passing on "leads" on small businesses seeking loans to the alternative finance platform.”         The Telegraph… read more


Banking Sector Co-Operation


Reputable crowdfunding platforms such as Tailwind Crowd are joining forces with commercial banks with the main aim of being able to form successful strategic partnerships that benefit all parties. Integrating traditional methods such as bank loans and venture capital to schemes that crowdfunding has to offer is resulting in a steady increase of new companies having the chance to launch and keep the economy expanding in a variety of sectors. 

Here are a five reasons why commercial banks should be working with crowdfunding platforms and not against them:

  1. Background Checks Complete

As a result of going through crowdfunding platforms first, banks feel safer lending to companies. They can be certain that all the necessary background checks have been carried out and more importantly, the product and/or service has been vetted by the investor community

  1. Market Testing

    By acting as the intermediary, the platform permits a company to be scrutinised by hundreds of professionals in the investor community. Once feedback is generated, market-validated companies are sent  on to the bank for further capital needed to grow and expand. By this stage, banks have more confidence in providing the company with a loan and can do this with full knowledge that all background checks and market tests have been carried out. It won’t be long before the banks and venture capitalists will be sending clients to platforms such as Tailwind Crowd to get the ideas validated first!  
  2. Corporate Social Responsibility (CSR)

    While it is vital for companies to take responsibility for their impact on society as a whole, the banking sector can assist entrepreneurs greatly through teaming up with crowdfunding platforms and consequently act as a catalyst in shaping the economy and supporting social impact projects.  Whilst laying focus on social impact, crowdfunding platforms such as Tailwind Crowd are looking to target additional types of commercial banks that are more focused on financing social impact projects such as environmental issues and firmly believe that there is no shortage of matching projects to suit them too.
  3. Portfolio Diversification

    By partnering up with crowdfunding platforms, banks become exposed to opportunities to work in partnerships with companies such as Fintech and other innovative industries where sustainable crowdfunding models can also have a place. Companies such as Tailwind Crowd are licensed as a Financial Service Provider by the AFM (Authority for the Financial Markets) and so can provide a secure and quick way for Hedge Funds to diversify their investment portfolio too with returns of short and medium term.
  4. Increase in Business Loans

    With crowdfunding playing an integral role in business development and growth strategies, the capital required for any one company to meet their goals can be split between the bank and the investment community. This will result in an increase in loans being allocated to new companies and also contributes to sharing the risk.

Thank you for taking the time to read this and I hope it has been informative. Please feel free to comment and any questions asked will be responded to within 24 hours.


Topics: Tailwind Crowd, Dutch Crowdfunding, Global Crowdfunding, Investor Community, Corporate Social Responsibility, Commercial Bank, Market testing, Portfolio diversification