The global alternative lending platform market size was valued at USD 2.24 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 23.6% from 2022 to 2030. The alternative lenders can penetrate the market due to their ability to provide effective and efficient loan services to underserved firms and individuals. The faster credit approval processes and ease of accessing the online platforms are also anticipated to boost the growth. Adopting technologies such as blockchain and Artificial Intelligence (AI) is likely to enhance the experience for lenders and borrowers, thus fueling the industry’s growth.
The digital transformation in financial processes is expected to make it transparent and relatively more reliable for end-users as compared to the traditional approach. Moreover, in alternative lending platforms, lending decisions are made by computer algorithms in real-time. Consequently, the growing popularity of such platforms in developed countries is expected to propel market growth. In addition, the ascending markets of developing countries with relatively lower exposure to formal financing services create a positive outlook for the industry.
The rising student population will likely create further opportunities as most students look for loans at a considerably lower interest rate. Various types of alternative lending platforms can offer lower interest rates as the cost of operations is less than that of traditional lenders. Moreover, the emergence of startups and fintech lending companies also bodes well for the industry as these companies are considered high-risk ventures. Alternative lending platforms provide financing to such ventures even without a mortgage and to borrowers with no credit history. The strict lending regulations among legacy financing institutions increase the need for these platforms.
Moreover, both individual and institutional investors consider alternative lending an efficient asset class as it is the least volatile investment substitute. Investment in this newly emerged asset class is simple and provides reasonable returns over a short span. Financial regulators are attempting to discover ways to govern this ever-changing alternative financing market so that it can grow safely. The regulators have established sandboxes in many industrialized nations, including the U.S, Australia, the U.K., and Singapore, to promote and accelerate the sector's advancements.
However, the potential risk of investors losing their money as a result of repayment defaults is expected to be a significant impediment to the development of the market. Such risks arise as most borrowers on the alternative lending platform don't have a good credit score. Although, lenders on the alternative lending platform let the borrowers qualify based on sales figures. Despite this, such risks can be mitigated with the integration of blockchain to increase the authenticity and security of lenders and borrowers.
Throughout the projected period, the COVID-19 pandemic is anticipated to have a significant impact on the growth of the industry. The alternative lending platforms witnessed a substantial increase in users as many people suffered financial losses owing to the outbreak. Numerous individuals across the globe have applied for loans using alternative lending platforms due to various benefits it offers, such as quick access and easy approvals. Moreover, to keep their business running in troubled times, SMEs are also inclined toward alternative lending platforms.
The loan origination segment accounted for the largest revenue share of more than 34.0% in 2021. The dominance is attributable to the growing popularity of alternative lending platforms as many individuals, especially students, are applying for personal and education loans. Several non-bank institutions such as insurance companies and fund managers previously invested in securitized products are exploring the growth potential. They offer credit to startups and SMEs in their developing phase.
The lending analytics segment is anticipated to witness significant growth during the forecast period. The growth is driven by the growing adoption of tools such as data analytics and predictive analytics in financing activities to reduce operational costs and maximize profitability. Improved customer acquisition and enhanced consumer experience contribute to the growth. Moreover, the efficient lifecycle management of the loans is one of the principal elements responsible for the growth of the segment.
The integration & deployment segment held the largest revenue share of more than 42.0% in 2021. The growing prevalence of alternative lending and the rising awareness of digital means of financing are propelling the segment’s growth. Continuous improvement in customer acquisition and the growing demand for matching the right lender with the borrowers are responsible for increasing the need for these services. Moreover, the flexibility to pick the deployment model as per various attributes such as security, budget, organizational needs, and infrastructure capability is also an important factor in boosting the growth of the segment.
The managed services segment is expected to witness the fastest growth during the forecast period. Managed services can help the institutions to cope with the rapidly changing industry trends and technological advancements. Businesses cannot maintain their line of operations while keeping up with the most recent IT trends. With the help of managed services, businesses are empowered to focus on what they do best. Additionally, the technology partners support these efforts with strong IT support; hence the segment is growing significantly.
The on-premise segment dominated the market in 2021 and contributed to a share of more than 68.0% of the global revenue. Although the lending industry is steadily adopting the cloud, many lenders still view this as a barrier since they are apprehensive about data security. They choose on-premise deployment over the cloud because they are unfamiliar with the technology and concerned about losing control over their data. The data kept with lending institutions are sensitive and can be stolen or misused. As a result, businesses are still preferring on-premise deployment.
The cloud segment is anticipated to grow at the fastest CAGR during the forecast period. In addition to offering a comprehensive view of client relationships to provide a better customer experience, cloud technology also reduces overall costs and improves operational efficiency. Furthermore, adopting cloud-based deployment enables remote access, which increases business flexibility. Several players are deploying cloud-based models to gain a competitive edge over their peers.
The crowdfunding segment dominated the market in 2021 and accounted for a share of over 69.0% of the global revenue. The growing prevalence of social media platforms contributes to the segment's dominance as it acts as a low-cost promotional tool for crowdfunding platforms. The global reach of social media provides the necessary push to the crowdfunding campaigns to onboard a pool of investors from around the globe. Several crowdfunding platforms are also utilized to raise funds for various initiatives or fight a cause, thus creating a positive outlook for the segment.
The peer-to-peer lending segment is anticipated to grow at a promising CAGR during the forecast period. The proliferation of smartphones and internet penetration is driving the segments’ growth as P2P lending platforms are run primarily via the internet using laptops or smartphones. In addition, the advantages associated with it, such as relatively low operational cost compared to legacy platforms, fuel the segments' growth. Moreover, the convenience of getting a loan and easy accessibility also bodes well for growth.
North America dominated the alternative lending platform market in 2021 and accounted for a share of over 29.0% of the global revenue. The dominance is attributable to the presence of several key players in the region. In addition, technological advancements and adoptions are also contributing to regional market growth. For instance, in June 2022, StellarFi, the U.S.-based public benefit corporation, launched its fintech platform, which is expected to help its users build their credit scores by paying their liabilities timely.
Asia Pacific is expected to grow at the highest CAGR during the forecast period. The growth of the regional market can be attributed to the growing awareness in countries such as China, India, and Japan, about the benefits offered by alternative lending platforms. The aggressive efforts being pursued by various organizations across the Asia Pacific to promote the utilization of alternative lending platforms are also expected to contribute to the growth of the regional market. For instance, in June 2022, a Singapore-based startup named Helicap raised USD 6.94 million in funding, and it has developed a technology for crunching data points of loans which can help in evaluating the creditworthiness of over 500 lenders across South East Asia and Oceania.
Industry incumbents are pursuing various strategies, such as new product launches, strategic partnerships, and geographic expansion to enhance their offerings. For instance, in June 2022, Blueprint Capital Advisors, an alternative credit investment firm, struck a deal with T30 Capital LLC to scale the real estate lending platform.
As the ongoing housing shortage and increasing rates in the U.S. are strangling the buyers, the institution plans to expand its loan pipeline to USD 2.5 billion from USD 750 million. To increase T30's lending capability and offer borrowing opportunities, T30 and Blueprint are expected to draw on their combined investing expertise and extensive network of industry contacts.
Market players are focusing on strategic collaborations to enhance their product offerings. For instance, in June 2021, MarketFinance Limited, the U.K.-based business finance lender, will embed the suite of its lending products inside the Funding Options application. This partnership is aimed to create seamless and quick accessibility to finance operations. Some prominent participants in the global alternative lending platform market include:
On Deck Capital
Social Finance, Inc.
Prosper Funding LLC
Zopa Bank Limited
Upstart Network, Inc.
Market size value in 2022
USD 2.65 billion
Revenue forecast in 2030
USD 14.47 billion
CAGR of 23.6% from 2022 to 2030
Base year of estimation
2017 - 2020
2022 - 2030
Revenue in USD million and CAGR from 2022 to 2030
Revenue forecast, company market share, competitive landscape, growth factors, and trends
Solution, services, deployment, end-use, region
North America; Europe; Asia Pacific; Latin America; MEA
U.S.; Canada; Germany; U.K.; China; India; Japan; Brazil
Key companies profiled
Funding Circle; On Deck Capital, Inc.; Kabbage; Social Finance, Inc.; Prosper Funding LLC; Avant, LLC.; Zopa Bank Limited; LendingClub Bank., Upstart Network, Inc.; CommonBond, Inc.
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The report forecasts revenue growth at global, regional, and country levels and analyzes the latest industry trends in each sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global alternative lending platform market report based on solution, service, deployment, end-use, and region:
Solution Outlook (Revenue, USD Million, 2017 - 2030)
Service Outlook (Revenue, USD Million, 2017 - 2030)
Integration & Deployment
Support & Maintenance
Training & Consulting
Deployment Outlook (Revenue, USD Million, 2017 - 2030)
End-use Outlook (Revenue, USD Million, 2017 - 2030)
Regional Outlook (Revenue, USD Million, 2017 - 2030)
Middle East & Africa
b. The global alternative lending platform market size was estimated at USD 2.24 billion in 2021 and is expected to reach USD 2.65 billion in 2022.
b. The global alternative lending platform market is expected to grow at a compound annual growth rate of 23.6% from 2022 to 2030 to reach USD 14.47 billion by 2030.
b. North America dominated the alternative lending platform market with a share of 29.70% in 2021. The dominance is attributable to the presence of several key players in the region. In addition, technological advancements and adoptions are also contributing to regional market growth.
b. Some key players operating in the alternative lending platform market include Funding Circle; On Deck Capital, Inc.; Kabbage; Social Finance, Inc.; Prosper Funding LLC; Avant, LLC.; Zopa Bank Limited; LendingClub Bank., Upstart Network, Inc.; CommonBond, Inc.
b. Key factors that are driving the alternative lending platform market growth include the rising adoption of digital channels to improve the customer experience and the rising adoption of machine learning, blockchain, and AI-based alternative lending platforms and solutions.
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