Home Business NewsBusinessBanking News Business peer-to-peer loans to hit $241.5bn value in 2021

Business peer-to-peer loans to hit $241.5bn value in 2021

by LLB Finance Reporter
13th Oct 20 4:07 pm

Although traditional banks and credit suppliers still hold the largest market share for consumer and business loans, recent years have witnessed considerable demand for fintech lending. With millions of SMEs searching for necessary financial backing to support their businesses amid the COVID-19 pandemic, 2020 witnessed a new rise in the number of these alternative loans.

According to data presented by BuyShares.co.uk the entire fintech lending industry is expected to grow 9.15% year-over-year to $291.5bn in 2020. The increasing trend is set to continue in 2021, with the transaction value of the unified market jumping by 25% to $335bn value.

Consumer and business loans in the Fintech space are offered through lending platforms, connecting borrowers to lenders, without the need for a high street bank. Sophisticated computer algorithms make lending decisions in minutes instead of days, enabling a much easier and quicker loan application process. These alternative lending platforms also provide lower rates to borrowers as well as higher rates to lenders.

In 2017, the global fintech lending market was worth $181.2bn, revealed the Statista Digital Market Outlook. By the end of 2019, the transaction value surged to $267.1bn, a 47% jump in two years. Statistics show the global fintech lending industry’s value is expected to increase by $24.3bn by the end of 2020 and hit a total of $291.4bn.

As the market’s leading segment, business peer-to-peer loans have witnessed a 14% YoY growth in 2020, with the transaction value rising from $180.8bn to $206.12bn. By the end of 2021, the cumulative value of alternative loans to small and medium-sized companies is set to jump over $241.5bn.

However, statistics indicate the COVID-19 crisis triggered a slight downsizing trend in the consumer peer-to-peer lending segment, with the combined value of loans falling by 1.2% to $85.3bn in 2020. Nevertheless, the Statista survey revealed this figure is expected to rise by 8.6% to $92.7bn in 2021.

China’s Fintech loans rise, the US market dropped 15% YoY

Regionally, China is the largest fintech lending industry globally, with an 86% market share. The country has been hugely affected by increased government regulation in recent years, which led to an enormous drop in the number of landing platforms and loans. Nevertheless, the Statista survey revealed the Chinese alternative lending market rose by 13% year-on-year to $251.87bn transaction value in 2020. This figure is expected to jump over $290bn next year.

On the other hand, as the world’s second-largest fintech lending market, the United States has witnessed a drop in the number of alternative loans. In 2019, the combined value of the business and consumer peer-to-peer loans in the United States amounted to $32.5bn. Over the last twelve months, this figure slipped 15% to $27.59bn.

Far behind the two leading markets, the United Kingdom ranked as the third-largest alternative lending industry globally, with $3.91bn transaction value in 2020. Switzerland and Italy follow with $1.36bn and $731 million, respectively.

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