The first Monday of October (this year, on the 6th), marks the World Financial Education Day. The slogan for this year: Get informed, plan, decide. It is essential for facilitating decision-making in order to achieve and maintain good financial health. Various entities are joining the scheduled events for this date, including informative talks, round tables, workshops, and school contests.
Information is undoubtedly very important, but education is even more so. I still have the desire and the hope that from all levels of responsibility in the sector, actions and activities continue to be carried out to improve the financial culture and education of society as a whole. From children to the elderly, we should have a minimum level of knowledge in basic finance. Educating and informing with professionalism, total transparency, and for all types of people.
This year, I have decided to dedicate my article to a system of collective financing, crowdlending. Crowd (multitude) + lending (loaning money) is a method of collective financing whereby individuals and investors lend money directly to companies or individuals, receiving back the capital plus the corresponding interests. All operations are conducted through digital platforms.
This allows borrowers to obtain financing swiftly. For investors, it offers a wide range of investment options with a predetermined financial return. Undoubtedly, it is an alternative to traditional banking that Fintech companies have been working on for years.
Why did I think of this topic? Recently, while listening to the national midday news from a reputable TV network, I noticed they dedicated several minutes to this financing system, specifically to document a method of financing for housing development. I was struck by the significant volume of financing that is already being conducted under this system.
I previously mentioned new financial service entities known as Fintech. About eight or nine years ago, I had the privilege of participating in the organization and development of a Conference on Financing for Companies at the Chamber of Commerce of Huesca. During that occasion, we had the opportunity to learn about various options for what is called alternative financing, including crowdlending.
I would like to point out that crowdlending should not be confused with crowdfunding (micro-financing). These are two financing systems with notable differences, although both are processed through online platforms. Crowdlending platforms act as intermediaries between investors and borrowers, connecting them to facilitate the process of formalizing the corresponding loans. They offer a safe, transparent, and efficient space for transactions to be carried out with the necessary guarantees.
On the other hand, crowdfunding platforms serve as intermediaries between «beneficiaries» and «donors». It is a model of collective financing where a group of people contributes monetary amounts to support a proposed initiative of various kinds. Primarily, the philosophy of crowdfunding is altruistic. However, individuals who contribute their money receive a reward for their collaboration, which can be in the form of products, equity, or returns in the form of loans.
I previously alluded to an aspect that I consider important to mention again: Offering a safe, transparent, and efficient space for transactions to be carried out with the necessary guarantees. I personally believe that entities are working diligently and effectively to prevent cyberattacks and fraud.
We cannot be oblivious to financial innovations. We must have curiosity, interest, and knowledge, but at the same time, we need to be alert, expectant, and cautious about potential scams. They are two sides of the same coin.
Recently, local press has reported on a pyramid scheme in which several dozen residents of Huesca were affected. One piece of advice: in all our dealings with entities, common sense and more common sense—understanding, and if possible, comprehending everything related to and the characteristics of the product we are going to contract. Money has a price, and anything that deviates from or strays away from that price warrants caution. The saying about a hard coin being worth four pesetas is as old as that about the hen that lays golden eggs.
I believe that not only on Financial Education Day, but also we must raise awareness, enlighten, educate, and teach about this matter. We must have sufficient information and training to discern and differentiate messages related to potential scams we receive, and clearly and wisely know how to act in those cases.
Miguel Ángel Otin Lloro
Secretary General, Huesca Excellent Business Forum
