Platform lending and the politics of financial infrastructures

Abstract

Online platform lending is typically understood as a challenge to incumbent banking institutions. Since its inception platform lending has been closely associated with particular financial and digital technological innovations that are thought to be changing how people engage in lending and borrowing around the world. In this article, I emphasise the deeply political aspect of these innovations. I claim that the platform lending model is built on the ostensible 'infrastructural quality' of credit providers across a number of national contexts. This helps explain why platform lending has emerged in its current form and why the firms involved tend to have a certain attachment to and association with the perceived merits of financial inclusion policy initiatives. The article further seeks to show that this infrastructural quality is politically contestable. When the politics of claims to infrastructure are taken seriously it is possible to demonstrate how platform lending, in spite of the 'alternative' and 'democratising' discourses that surround the sector, is in fact built upon a particular set of political state and business-led agendas that essentially further entrench widespread dependence on debt. Financial infrastructures, platform lending, financial inclusion, platform capitalism, alternative finance.

Governing the gold rush into emerging markets: a case study of Indonesia’s regulatory responses to the expansion of Chinese-backed online P2P lending

“…The growing convergence of information technology and financial services in the developing world has led to new research on the fast-moving development of financial technologies such as online lending. Scholars have focused on the interplay of financial products and services, technologies, risks, and institutions, and how they shape outcomes such as financial inclusion and poverty reduction in various national contexts 1 1 USD = 14,363.07 IDR (May 2019) (Shen, 2015;Buckley & Webster, 2016;Stern et al 2017;Tsai 2017;Claessens et al 2018;Malady et al 2018;Bateman et al 2019;Clarke 2019;Singh 2019;Suryono et al 2019;Lai and Samers 2020;Ehrentraud et al 2020;Thakor 2020;Wang et al 2020). Recent reports also examined the potential outcomes of a larger share of fintech-facilitated credit in the economy, finding that while it could increase financial stability by providing access to alternative funding sources and creating efficiency pressures on incumbent banks, it might also weaken lending standards and introduce more procyclical credit provision in the economy (FSB 2017).…”

Towards an economic geography of FinTech

“…While our paper has focused on financial inclusion in the Global South (noting complex relationships with Global North finance and technology firms and institutions), issues of inequality and indebtedness through FinTech are also important in the Global North. Indeed, research into the digital transformation of rental housing market as a new asset class in the USA (Fields, 2019) and the platform lending in the UK and the USA (Anderson et al, 2020;Clarke, 2019) demonstrate the importance of new and reconfigured geographies of FinTech-enabled financial inclusion/exclusion that is not limited to poorer countries.…”

Governing Fintech and Fintech as Governance: The Regulatory Sandbox, Riskwashing, and Disruptive Social Classification

“…Thus, the conception of 'risk' is something that can be mitigated 'by implementing appropriate safeguards to prevent harm occurring' (FCA 2017, p. 6). The fact that in the case of some fintech, risk may be not only or mainly financially, but primarily socially harmful is not exposed (Clarke, 2019). The FCA regulatory sandbox is designed primarily by financial experts working for FCA.…”