Alternative Lending Market Size, Share & Trends Analysis Report By Type (Crowdlending, Marketplace Lending), By Region (North America, Europe, APAC, CSA, Middle East & Africa), And Segment Forecasts, 2021 - 2028

Report Overview

The global alternative lending market size was valued at USD 539.7 billion in 2020 and is expected to expand at a CAGR of 5.3% from 2021 to 2028. The lower interest rate offered is the key driver for the market. Moreover, the emergence of small and medium-sized enterprises (SMEs), particularly in developing countries, is another factor that drives the market. The COVID-19 outbreak positively impacted the market as the demand for loans from SME’s and consumers on the alternative lending platforms has increased significantly.

Alternative lending mainly offers an extensive range of loan options to consumers and business owners outside of a traditional bank loan. It is the procedure of getting loans from non-banking institutions or other financial institutions that have not received a full banking license. Alternative lending is gathering attention, mainly from small- and medium enterprises. According to SMEs Finance Forum, in 2018 there was a funding gap of USD 5 trillion between the financing requirements of SMEs and the institution-based financing accessible to them causing SMEs to seek alternative funding options.

Alternative lending has developed as a practical asset class. It is a minimum volatile option for both retail investors and institutional investors. These investments are easy and offer decent returns for a short time period. Alternative lending is observing constant global development and the financial regulators are functioning in coming up with solutions to control the sector to grow safely. In many developed economies such as, U.K. Singapore, U.S., and Australia, the regulators have created sandboxes to support and accelerate the advances in the sector.

The COVID-19 pandemic has positively affected the alternative lending market. Due to the COVID-19 pandemic, numerous countries imposed strict lockdowns, and mobility restrictions to avoid the spread of the virus. Though alternative lending platforms have fewer customers relatively, they have witnessed a significant increase in terms of users. This is because many SME’s demand quick loan approvals for the continuation of their businesses during troubled times. In addition, most of the individuals applied for personal loans and educational loans, as they suffered financial losses due to the COVID-19 pandemic.

Type Insights

The crowdlending segment dominated the market and contributed a revenue share of more than 65% in 2020 and is expected to witness a CAGR of 5.1% from 2021 to 2028. Crowdlending has developed in recent few years as an advanced way to finance new ventures and small companies. The segment has developed from a little-known source of funding to a mainstream alternative, offering business owners extra options for financing the development and expansion of their business. SME businesses frequently use crowdlending (business) for their finance requirements. Thus, crowdlending (business) segment demand is large and contributes more to the market revenue.

The marketplace lending (consumer) segment is expected to witness the highest CAGR of 5.5% from 2021 to 2028. Growing digitization in the banking sector, development of small and medium-sized enterprises mainly in developing countries, and rising student population demanding educational loans are some of the factors expected to increase the demand of marketplace lending (consumer) over the forecast period. The marketplace lending uses online platforms to connect investors and loan borrowers. The platform then collects principal payment and interest from borrowers and sends that money to investors.

Regional Insights

North America dominated the market and accounted for the highest CAGR of 5.7% from 2021 to 2028. According to the Global Entrepreneurship Monitor, the start-ups in the U.S. hold more than 17.4% of the country’s entire population. This shows the massive opportunity for crowdlending in this region. In addition, the U.S. market has already witnessed increased collaboration between banks and marketplace lenders. All these factors are expected to lead to the increase in demand for alternative lending, thus the region is expected to witness the fastest CAGR over the forecast period.

Regional analysis revealed that Asia Pacific accounted for a significant market revenue share of more than 80.0% in 2020. China was the major country in the world contributed for the market and held maximum share in 2020. Rise in digitization initiatives among financial organizations and increase in government initiatives for alternative lending in emerging countries, such as India and China are the key factor for large revenue generation of the market in Asia Pacific. Moreover, presence of large number of small and medium enterprises also contributes to market growth in Asia Pacific.

Key Companies & Market Share Insights

The market is characterized by the presence of established as well as emerging players. Almost all players operating in this market are actively looking to diversify sources of financing. Mergers and acquisitions among platforms are popular in the market in most countries globally. The emerging companies in the market are strategically raising funds to offer advanced and technologically integrated solutions. Some of the prominent players in the alternative lending market include:

• LendingClub Corporation
• Prosper Marketplace, Inc.
• Funding Circle Holdings PLC
• On Deck Capital, Inc.
• OurCrowd Management Limited
• Social Finance, Inc.
• GoFundMe, Inc.
• LendingTree LLC
• CreditEase Corporation
• Kickstarter, PBC

 Alternative Lending Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2028. For the purpose of this study, Million Insights has segmented the global alternative lending market report on the basis of type and region:

• Type Outlook (Revenue, USD Billion, 2017 - 2028)
  • Crowdlending (Business)
  • Marketplace Lending (Consumer)
• Regional Outlook (Revenue, USD Billion, 2017 - 2028)
  • North America
    • U.S.
    • Canada
  • Europe
    • U.K.
    • Germany
    • France
  • Asia Pacific
    • China
    • India
    • Japan
  • Central & South America
    • Brazil
    • Argentina
  • Middle East & Africa
    • Saudi Arabia
    • South Africa