The online lending market has been going strong in America for years. The major players in the peer-to-peer lending (P2P) marketplace are thriving and increasing their customer base and revenues. Many P2P lenders have expanded their offerings beyond basic consumer loans. Today you can find student loans, mortgages and small business financing online.
According to a February 2019 TransUnion report, 38% of all personal loan balances were held by alternative marketplace lenders (P2P). TransUnion’s senior vice president said that consumers see value in online lending platforms that are easily accessible at any time of day.
Peer-to-Peer Lenders Are Where You Are
P2P lenders provide much-needed financing according to specialized algorithms. This opens the door to millions of consumers who would be turned away by banks or face excessive fees and interest rates. However, even consumers who might qualify for a traditional bank loan, prefer to go online, skipping meetings, tons of paperwork, and bureaucratic delays.
Online lenders are the perfect players in today’s digital paradigm. We do everything online. Even if we make a purchase at a retail store, we still go online first to check out the product, compare prices and look for reviews. P2P lenders provide a portal for consumers to apply for financing in an easy and timely way. The transparency of the online lending platform is another reason for the market’s growing popularity.
Peer-to-Peer Lending is Growing in International Markets
The growth of peer-to-peer lenders is not limited to the United States. The global online lending market, which was valued at $38.77 billion in 2017, is showing every sign of continued expansion and strengthening throughout the world.
Online lending market studies report that demand for P2P marketplace lending and crowdfunding around the world is on the rise in developed countries. Forecasters anticipate a growth rate of more than 48.2 percent over the years 2018-2025. China is expected to lead the global alternative lending market, possibly ranking among the top five lending markets in the world.
Online Lending Creates Economic Parity in Developing Nations
A healthy online lending market creates radical opportunities for populations to access capital and improve their financial health. This is particularly true in countries where getting to a bank can be a dangerous or at least grossly inconvenient experience.
Developing countries have few banks and many of those that exist struggle with poor business management practices or fraud. In countries where traditional banking ecosystems are corrupted, delaying the ability of small businesses to grow, online lending platforms offer a viable alternative. This and many other factors contribute to the growth of the global P2P lending marketplace.
The Southeast Asia Market is Booming
Analyses continue to predict the strongest growth in the Chinese online lending market, but new government regulations have dampened the enthusiasm of marketplace lenders. Many P2P platforms are looking to fertile markets nearby such as Vietnam, Indonesia, and India. The Southeast Asia region offers considerable growth potential among a consumer base that is hungry for access to financing.
India is growing a successful native market of P2P lenders, so Chinese lenders will have to work their way inside. Indifi, an online lending startup in India, for example, announced in early August 2019 that it had raised $21 million in its latest round of venture capital fundraising. This infusion of capital will enable Indifi to expand its reach throughout the country. Previously, Indifi had raised $34 million.
The biggest growth spurt in Southeast Asia, though, appears to be in Indonesia, where favorable legislation has resulted in a significant uptick in the number of consumers searching for online loans.
Will P2P Continue to Grow in Europe?
The European online lending market is a little less predictable. Current indicators suggest that overall growth might be slowed, in light of some of the economic challenges the EU is facing. However, current players in the peer-to-peer lending marketplace should not see declines in their performance.
This does not mean, though, that opportunities for growth and expansion do not exist in Europe. EstateGuru is an online lending platform originally concentrating on markets in the Baltic countries of Latvia, Estonia, and Lithuania, as well as Finland and Span. They recently expanded operations to Portugal. Head of Business Development at EstateGuru, Mihkel Roosme, said that they hope to become the leading online lending platform in Europe. Their focus is on small and mid-size companies.
Bottom line: The online lending market is expanding across the globe which is great news for consumers.