Fintech lending Industry to hit USD 390.5 billion by 2023

Wednesday 5 February 2020 12:53 CET | News

With considerable demand for fintech lending in recent years, it has been estimated that global fintech lending will hit a USD 312.6 billion transaction value in 2020.

The alternative loans industry has been growing by 17% year-on-year, according to data gathered by The rising trend, highlighted by peer-to-peer companies such as Lending club in the US or Funding Circle in the UK, is set to continue, with the entire market reaching USD 390.5 billion value by 2023.

Consumer and business loans in the fintech space are mostly offered through lending platforms, connecting borrowers to lenders, without the need for a high street bank. Computer algorithms make lending decisions in minutes instead of days. These platforms have grown in popularity in developed countries. However, emerging markets with low access to formal financial services are also expected to experience rising demand for business and consumer peer-to-peer loans.

The volume of business and consumer peer-to-peer loans increased by 30% since 2017 and is expected to hit 72.8 million in 2020, growing by 11.2 % year-on-year. In the next three years, it is forecast to peak at 87 million globally.

Business peer-to-peer lending is the most significant part of the market, with a 70% market share expected to be worth USD 219.1bn in 2020. The number of loans to small and medium-sized companies is forecast to jump to USD 290.1bn by 2023.

Consumer peer-to-peer lending lags business loans, with USD 93.5bn a transaction value expected in 2020. By 2023, consumer peer-to-peer loans are set to edge up to USD 100.4 billion worth, almost three times less than business lending.

China and the US make up 95% of the fintech lending market. However, the consumer lending model in China is different from the US model.

China is the largest alternative lending market globally with a 90% market share and a USD 265.7 billion transaction value expected in 2020. The country has been hugely affected by increased government regulation in recent years, which led to a drop in the number of landing platforms and loans. Still, the Statista survey shows the Chinese market will top USD 341.2 billion over the next three years. With USD 33.5 billion market value in 2020, the US is the second-largest alternative lending market in the world, home to large players such as Lending Club, Prosper and SoFi.

Behind the two leading markets, the UK ranked as the third-largest alternative lending market, expected to peak at a value of USD 4.8 billion in 2020. However, Switzerland, Denmark, and Spain are expected to see the highest growth rates over the coming years, rising by 27.4%, 23.7%, and 22.9% respectively year-on-year. Canada is forecast to show the lowest negative growth with a compound annual growth rate of -5.1% by 2023.

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Keywords: lending, fintech, payments , banking, loans, US, China, Europe, SoFi, Lending Club, study, Statista, Funding Circle, UK
Categories: Banking & Fintech
Countries: World
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