Why alternate financing is a game changer for Indian investors

As India continues to march towards becoming an economic powerhouse, investors are increasingly looking for investment opportunities outside the traditional ecosystem to back their portfolio and safeguard their wealth from future financial downturns.

With increasing market volatility, declining interest rate, and uncertainties in publicly traded securities and markets, investors are finding alternative investments an ideal space to invest.

Until the rise of alternative investments, people largely invested in traditional investment products. However, with the growing availability of information, increased digitisation, advancement in technology, and availability of multiple investment options that offer flexibility in tenure and high returns, alternate investments are becoming a lucrative option for investors. Moreover, these alternate investment options are now pivotal to portfolios being driven by individuals.

Today, people are open to exploring new kinds of investment options that can provide high returns, and alternate financing is one such option.

Why is alternate financing attracting investors?

With investors constantly on the lookout for investment options outside of traditional banking and stock market investments, alternative financing instruments like invoice discounting have been gaining in popularity.

Non-traditional financing allows the average investor access to assets not correlated to the stock market, offering diversification and potentially higher returns when compared to mutual funds, stocks, and bonds. This type of financing supplements the traditional portfolios of HNIs who feel the need for unique strategies in their portfolios.

Today, HNIs are increasingly experimenting with alternative financing as an investment option, as it aligns them with the growing ecosystem of the country where they have an impact on businesses of all sizes--from MSMEs to MNCs. Investing in products like invoice discounting allows investors to also be a part of the underlying assets of the organisation that generally is not the case with other investment options.

At the same time, today investors seek options that provide more flexibility and transparency, along with quick returns, which is where alternative financing products come in.

Tech-driven alternative financing platforms

These new-age platforms allow investors a hassle-free investment opportunity. Investors get a holistic end-to-end investment option with professional management and completely digital investment experience at the click of a button. Not only do investors receive real-time status updates about their investments, but they also have access to a personalised dashboard that offers them a snapshot of their portfolio complete with past investments, ongoing deals on the platform, and options to manage funds.

Alternative financing businesses have also increasingly adopted and implemented internet-of-things (IoT) and blockchain-based technologies that help in adding advanced proficiencies such as easy accessibility and transparency to the alternative financing platforms, which further boost the market growth.

While a lot has been innovated in the traditional space, alternative financing provides a notch higher in terms of higher transparency, availability of information, data management, and being highly tech driven. This allows investors to have a deeper insight on their investments and nudges them to invest.

The present and future

The global alternative financing market size was valued at $6.62 billion in 2021 and is anticipated to increase at a CAGR of 6.3% from 2022 to 2028. Quick and seamless access to credit in comparison with traditional financing is the primary driver for the market. Moreover, the rising acceptance of alternative finance instruments and the convenience of the financing services are driving the market.

Additionally, as alternate financing embraces and adapts to new age technologies, it is bound to foster market growth and become a more promising financing choice for investors.