Marketplace (P2P) Lending Trends – Asia Pacific

Sep 21, 2016 Blog  Marketplace Lending , peer to peer lending

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Online alternative finance is developing quickly in the Asia – Pacific region. It is considered so by innovative financial instruments and channels that fall outside the traditional avenues of capital raising and financial intermediation. The orthodox alternative finance lending model is commonly referred to as peer to peer (P2P) or marketplace lending, where the platform allows individual and institutional lenders to invest directly or indirectly into loans issued by borrowers looking for funds. The largest market segment in the Asia – Pacific region (excluding China) by 2015 volume is marketplace / peer to peer business lending followed by marketplace / peer to peer consumer lending.

Peer to Peer consumer and business lending are online alternative finance activities which are directly connecting lenders to consumers and small business borrowers creating new ways for individuals and institutions to choose how and whom money is distributed, lent and invested.

China is the worlds largest online alternative finance market by transactional volume, registering $101.7 billion in 2015. This counts for almost 99% of the total volume of the Asia – Pacific region. In comparison, the total size of the UK online alternative finance market was $4.5 billion. The Chinese online alternative finance market grew an average growth rate of 328% between 2013 and 2015. Marketplace / peer to peer consumer lending is the largest market segment in China with $52.44 billion lent, followed by marketplace / peer to peer business lending, $39.63 billion.

There is a plausible explanation for this. China is the second largest economy in the world and has the biggest online / retail ecommerce market globally. So it’s not surprising that is has a sizeable online alternative finance market. They also have the world’s largest internet base totalling 668 million people.

Business financing accounted for 44% of total online alternative finance activity in China with a total of $45 billion in 2015. Outside of China, the total volume of online alternative business funding reached $686 million in the Asia Pacific region in 2015, growing with an average growth rate of 172% per annum over the period 2013 to 2015.

The Asia – Pacific online alternative finance market is fluid, diverse, complex and growing at a rapid pace. The opportunities for the worlds most populous region to harness the potential of alternative finance for innovation, economic growth, market efficiency and creativity are plentiful.

This article is based on The Asia-Pacific Alternative Finance Benchmarking Report which you can read here.

 

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