KPMG Report: Online Lending in Continental Europe Q1 through Q3 2016

Jevhenijs Kazanis TwinoKPMG, along with AltFi data, has published a new report on alternative lending in Europe. KPMG also sourced data from the most recent Cambridge Centre for Alternative Finance report. The document, entitled Alternative Lending Market Trends in Continental Europe 2016, provides an interesting snapshot of online lending beyond the UK.

Jevgenijs Kazanins, CEO of Twino, commented on the report; 

“This report shows that the UK still leads the way for alternative finance, although continental European lenders are quickly catching up. We believe that alternative finance will continue to grow quickly in Continental Europe, potentially to the detriment of the UK as the effect of the Brexit vote begins to weigh on the British economy.”

As many industry participants know, the UK was the birthplace of peer to peer lending. In the ensuing years, peer to peer lending has grown into a robust market where borrowers, both business and consumers, may more easily access credit than with traditional banks. Today, the UK generates four times more online lending than the entire continental Europe.

Following the UK, the top two European countries for online lending include France and Germany. The authors point out that Latvia is breaking away from the pack with the third highest volume of funded loans in 2016 through Q3.  The 2016 totals through the 3rd quarter show France at €188.5 million; Germany at €162.2 million and Latvia at €110.7 million. The phenomena of smaller countries jumping ahead of far larger ones has to do with the fact that lending does not need to be bounded by country borders.

Peer to peer consumer lending is the largest segment of online lending.  Through Q3 of 2016, consumer P2P generated 72% of total lending. P2B lending has shown “significant growth” but has not yet surpassed consumer lending.  From 2013 to Q3 of 2016, P2P Consumer lending grew from €130 million to €450 million.

euros-money-eu-cashRegarding the largest continental European platforms, Younited Credit in France and Auxmoney in German come in at first and second place respectively.  Mintos and Twino, both operating out of Latvia, are in 3rd and 4th place – punching above their weight class.  KPMG says these two platforms exceeded €100 million in funded loans during Q1 to Q3 of 2016 – “outgrowing Finish players Fellow Finance and Fixura, as well as Estonian Bondora.

The P2P Consumer lending market in Continental Europe is dominated by 13 online platforms located in 9 countries providing consumer loans in Europe and worldwide. While dominated by a few platforms, only 6 from the 13 largest platforms in Continental Europe have shown growth in volumes funded during 1Q-3Q 2016 compared with 2015. Both Twino and Mintos have shown the highest growth rates, with Twino platform reporting eleven-fold growth.

Focusing on the Latvian platforms, KPMG highlights that Twino is operating in Latvia, Poland, Georgia, Kazakhstan, Mexico, Spain, Denmark, Romania, and Russia. Mintos, launched in the beginning of 2015, is operating across Europe working with both private and institutional investors. Mintos has applied to the UK Financial Conduct Authority (FCA) for regulatory approval. The P2P Lender expects to receive a license to operate in the UK in early 2017.  Both Latvian platforms are expected to push into new markets to continue outperforming other European platforms when it comes to volume growth.

The KPMG report is embedded below.

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