Fintech lending industry to top $312bn this year, $390.5bn by 2023

Global fintech lending or the alternative loans industry will hit a $312.6 billion transaction value this year, growing by 17 per cent year-on-year, according to a report by LearnBonds.com. The rising trend is set to continue, with the global market reaching $390.5 billion value by 2023, the report added.

The volume of business and consumer peer-to-peer loans increased by 30 per cent since 2017 and is expected to hit 72.8 million in 2020, growing by 11.2 per cent year-on-year. In the next three years, it is forecast to peak at 87 million globally.

Business peer-to-peer lending is the most significant part of the market, with a 70 per cent market share expected to be worth $219.1 billion in 2020. The number of loans to small and medium-sized companies is forecast to jump to $290.1 billion by 2023.

Consumer peer-to-peer lending lags behind business loans, with $93.5 billion a transaction value expected this year. By 2023, consumer peer-to-peer loans are set to edge up to $100.4 billion worth, almost three times less than business lending.

Consumer and business loans in the Fintech space are mostly offered through lending platforms, connecting borrowers to lenders, without the need for a high street bank. These platforms have grown in popularity in developed countries. However, emerging markets with low access to formal financial services are also expected to experience rising demand for business and consumer peer-to-peer loans.

Sophisticated computer algorithms make lending decisions in minutes instead of days, and the lean company structure of fintechs means they can offer lower rates to borrowers as well as higher rates to lenders.

The growing number of fintech firms in emerging countries is expected to drive market competition, by forcing traditional banks to adapt their services and meet the needs of tech-savvy consumers.