Online lending services like peer-to-peer, crowdlending, marketplace lending or direct lending, is predicted to hit $9.6 billion in transaction volume in 2020. A 10% year over year rate of growth, according to a new report.
European Fintech loans are expected to hit 1.3 million by 2023.
Finanso.se states that “innovative lending services” are becoming increasingly popular across Europe. More and more businessess and consumers are using these digital-first services.
The report states that “crowdlending” generates nearly 70% of total market transaction volume. Fueled, in part, by the financial crisis and traditional banks avoidance of risk, a door was opened for innovative Fintechs to fill the void and connect “borrowers directly to lenders” removing banks from the equation.
Lending platforms use sophisticated computer algorithms to make lending decisions, provide fast loans, and lower rates to borrowers. Investors, on the other hand, are given the ability to easily invest in loans outside of their countries at attractive returns.
P2P or crowdlending remains the largest segment. In 2019, this totaled $8.7 billion, according to the report. Overall, consumer lending dominated in numbers but consumers borrowed far lower average amount of a loan.
As one would expect, the UK continues to dominate the online lending sector – just like about all other Fintech sectors. The total value of UK online loans is expected to peak at a value of $4.8 billion this year.
Switzerland took 2nd place in Europe with $1.4 billion worth transactions in 2020, growing by 27.4% year-on-year.
With a $796 million transaction value in 2020, Italy ranked as the third-largest fintech lending market in Europe.
As the European Union is expected to harmonize crowdfunding rules, this entire segment of Fintech should benefit from an improved regulatory environment.