Alternatives to Profit-Oriented Banking and Finance

Name: Institution Affiliation: Instructor: Course: Date: Alternatives to Profit-Oriented Banking and Finance Introduction Alternative financial institutions refer to banking and finance organizations that are not mainly focused on maximizing profit and pursuing shareholders’ interests but they normally have a dominant goal or objective. Alternative banking systems have been increasing in different parts of the world. For example, the United Kingdom is among the few countries in Europe where alternative finance is rapidly replacing the already failed banks. As per 2015, the alternative banking movement was estimated to be over £3.2 billion. The growth of this industry is facilitated by people’s desire to know where their money is and also comprehend how it is being used. In most cases, the mainstream banks used the money they collect from their customers to fund different investments mostly on financial markets where their customers have no control. The alternative finance approaches have existed for decades but they began increasing in recent years. Zopa, an online peer-to-peer lender was established in 2005 with the goal of creating better solutions for everybody’s money needs. There are other many options were established after the financial crisis (Davis, p.5). For example, community share schemes promote direct investment and also give people a democratic influence on the projects. It is keynoting that the importance of these diverse institutions is not mainly based on their value as alternatives to the big profit-oriented banking and finance systems; their significance is rooted on their capacity to point to a future financial system which serves the needs of the people rather than the returns to the business. There are different types of alternative financial institutions. These may include cooperatives; these are financial institutions whose main objective is to offer financial assistance to the economically weaker sections of the society. Ordinarily, cooperatives are established by volunteer group...