The global peer-to-peer lending market industry has been witnessing substantial growth over the years, particularly in developed countries where the financial markets are much stronger. Ever since the financial crisis, lenders have been looking for higher returns on their investments. Borrowers, on the other hand, have been keen on getting better access to credit and lower rates of interest. The financial crisis saw the tightening of banking norms in most countries. Burdened by this, banks were unable to meet the needs of its clients. Peer-to-peer lending emerged as a solution to the borrowers’ quest for unconventional sources of loans.
Remarkable Growth in Store for Global Peer-to-peer Lending Market
Peer-to-peer lending is a platform that enables the transparent and convenient investment or borrowing of money by small businesses, individuals, and startups in just a few clicks. These online services match borrowers directly with a host of lenders. Services provided by peer-to-peer lending are much cheaper than those offered by traditional financial institutions and the lower overhead costs make these services extremely attractive for those looking to enter into this market.
Small businesses, real estate, consumer credit, and student loans have been benefitting from peer-to-peer lending, with small businesses being the largest revenue generators in this market. This segment is likely to expand at an incredible 48.8% CAGR from 2016 to 2024. Marketplace lending and traditional P2P lending are the two key models offered by this platform. The former has been the go-to choice for investors as well as borrowers across the globe and this segment is estimated to contribute a whopping 74% in terms of revenue to the overall market by 2024.
The global peer-to-peer lending market is poised to expand at an astounding CAGR of 48.2% from 2016 to 2024, states Transparency Market Research in one of its leading reports. The value of this market was estimated to be US$26.1 bn in 2015 and is likely to surge to US$897.8 bn by 2024.
Peer-to-peer Lending: Players in Developed Markets Shifting Focus to Emerging Countries
North America, followed by Europe, is the largest market for peer-to-peer lending, with a significant share of the global investment and borrowing by customers stemming from these two regions. Accounting for a 44% share in the global peer-to-peer lending market in 2015, North America is presently the largest revenue generator in this industry. Most of the players in the peer-to-peer lending market have been predominantly active in North America and Europe. The prominent companies include Upstart Network Inc., Pave, Inc., LendingClub Corporation, Peerform, Funding Circle Limited, CommonBond Inc., Social Finance Inc., Daric Inc., CircleBack Lending, Inc., and Prosper Marketplace, Inc.
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In recent years, however, a number of these players in the peer-to-peer lending market have been shifting focus toward emerging countries in Asia Pacific, owing to the lucrative opportunities in these developing markets. Countries such as Australia, Japan, China, and India have a growing presence of small and medium businesses looking for alternate financial options. The surge in the number of startups shooting up in several expanding cities is also likely to give the Asia Pacific peer-to-peer lending market a significant boost.