Key Takeaways:
- Online lending, as per research by the Gillmore Centre for Financial Technology, can yield higher average returns (8.86% to 13.08%) than traditional asset classes like stocks, bonds, and real estate.
- The study introduces a novel framework, General Characteristics-Based Portfolio Policies (GCPP), that has the potential to revolutionize institutional investment strategies.
- Lack of awareness and understanding of online lending among investors is highlighted as a major hurdle, with experts urging institutional investors to explore this lucrative asset class.
Redefining Profitability: Online Lending Takes the Lead
In a surprising turn of events, a recent study by the Gillmore Centre for Financial Technology has unveiled a well-kept secret of the financial world: online lending can be more profitable than conventional asset classes such as stocks, bonds, and real estate. This groundbreaking research introduces a transformative framework, General Characteristics-Based Portfolio Policies (GCPP), and underscores the untapped potential of online lending.
Breaking the Mould: The Power of GCPP
The Gillmore Centre’s research reveals that the GCPP framework can deliver an average rate of return ranging from 8.86% to 13.08% annually. These impressive figures significantly outshine the returns from an equal-weight portfolio of loans. The study, titled ‘Gaining a Seat at the Table: Enhancing the Attractiveness of Online Lending for Institutional Investors,’ calls upon institutional investors to seize this opportunity and gain a foothold in the online lending landscape.
The Warning Bell: Missing Out on Online Lending’s Potential
Ram Gopal, Director of the Gillmore Centre for Financial Technology and Co-Author of the study, emphasizes the urgent need for institutional investors to recognize the potential of online lending. Gopal states, “Online lending is in danger of slipping by and costing institutional investors a lot of money. Limited awareness and understanding, coupled with government regulations, have led to this high-potential investment flying under the radar.”
Unlocking Growth: Collaboration is Key
The study suggests that online lending, facilitated by the GCPP framework, can revolutionize institutional investment strategies and unlock business growth for many organizations. It calls for industry leaders and asset platforms to collaborate, ensuring that businesses and investors can harness appealing investment opportunities backed by world-class research.
GCPP: A Framework for the Future
Morris Strub, Associate Professor at the Gillmore Centre for Financial Technology and Co-Author of the study, highlights the significance of the GCPP framework. Strub remarks, “The absence of effective frameworks for investment in online loans and other new asset classes continues to complicate the investment landscape. But the Gillmore Centre’s development of GCPP can help sophisticated investors harness the potential of new asset classes emerging from Financial Technology.”
Authoritative Quartet: Leading Minds Behind the Study
The study ‘Gaining a Seat at the Table: Enhancing the Attractiveness of Online Lending for Institutional Investors’ was authored by a quartet of distinguished university academics:
- Ram Gopal, Director of the Gillmore Centre for Financial Technology at Warwick Business School.
- Xiao Qiao, Assistant Professor at the School of Data Science at the City University of Hong Kong.
- Morris Strub, Associate Professor at the Gillmore Centre for Financial Technology.
- Zonghao Yang, PhD student at the City University of Hong Kong.
The Road Ahead: Unleashing Online Lending’s Potential
As investors grapple with a rapidly evolving financial landscape, the Gillmore Centre for Financial Technology’s research opens new doors to profitability. Online lending, powered by the GCPP framework, emerges as a formidable asset class that could reshape investment strategies. The study serves as a clarion call to institutional investors to explore the untapped potential of online lending and “gain a seat at the table” in this evolving financial landscape.
Please note that this article is based on publicly available information and does not contain any confidential or proprietary details.
About Gillmore Centre for Financial Technology
The Gillmore Centre for Financial Technology is at the forefront of groundbreaking research, exploring the intersection of finance and technology. Comprising academics and research fellows specializing in emerging technologies like artificial intelligence, machine learning, blockchain, mobile payments, cryptocurrencies, and crowdfunding, the Centre aims to decipher the impact of these innovations on financial activities. Supported by a £3 million donation from Clive Gillmore, the Gillmore Centre for Financial Technology operates under the aegis of Warwick Business School.
Learn more: Gillmore Centre for Financial Technology
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