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Cambridge Releases Research On AltFi Market in Asia-Pacific

The study highlights that China is the world’s largest alternative finance market by transaction volume, registering $101.7bn in 2015.

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Cambridge has recently released a research on the status of the Alternative Finance Market in Asia-Pacific, in conjunction with KPMG and Sydney University. The research – entitled “Harnessing Potential” – is a benchmarking report for the Chinese, Indian, Southeast Asian and Australasian markets and examines its recent trends, competitive dynamics and a great deal more.  

Alternative finance is developing rapidly in the Asia-Pacific region. The report captures an estimated 70% of the visible market and estimates a transaction volume of  $102.81bn in 2015 (323% year-on-year growth).

China is the world’s largest alternative finance market by transaction volume. Between 2013 and 2014, Chinese transaction volumes increased from $5.56bn to $24.3bn (a year-on-year growth rate of 337%) and from $24.3bn to $101.69bn (a year-on-year growth rate of 319%) between 2014 and 2015. The Chinese market constitutes almost 99% of total transactional volumes in the Asia-Pacific region and it’s almost 23 times larger than the UK sector – which registered a transaction volume of $4.5bn (£2.8bn) in 2015, as reported by AltFi Data.

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Excluding China, the rest of the Asia-Pacific region recorded a volume of $1.12bn in 2015  – with a 313% year-on-year growth rate – up from $271.94m raised in 2014. Between 2013 and 2014, this market increased from $137m to $272m (an average year-on-year growth rate of 98%). 

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Japan’s online alternative finance market accrued a transaction volume of $360.23m in 2015, followed by Australia (with $348.37m), New Zealand ($267.77m), South Korea ($41.18m), India ($39.91m) and Singapore ($39.76m).

The report hones in on the dynamics and the diversity of the Asia-Pacific Alternative Finance market as well as on market fundamentals. You may read the full report here. The research outlines four possible reasons for the booming of Asia’s alternative finance market, as shown below.

  • China is the second largest economy in the world and has the biggest online retail/e-commerce market globally

  • China has the world’s largest Internet user base totalling 668 million and leads the world in smartphone penetration

  • The Chinese online alternative finance market is largely unregulated, therefore its explosive growth has been mostly unrestricted and unchecked

  • Institutional ownership within the Chinese online alternative finance sector is prevalent, with major companies and institutions such as Ping An, Alibaba, and Tencent involved

The benchmarking report concludes by highlighting that the opportunities for the world's most populous region to harness the potential of alternative finance are abundant. On the other hand, the main challenges are how to best nurture the continued growth of the Asian AltFi industry, how to grow the market in a sustainable manner and how best to develop an appropriate and proportionate regulatory regime.

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