P2P market worth $10bn per year by 2020, suggests study

A study of the global online lending and crowdfunding market by Juniper Research suggests a doubling of revenues in the coming three years.

The global market for p2p/marketplace lending and crowdfunding platforms is set to reach $10.5bn by 2020, doubling the current forecasted 2016 revenues, according to a new report by Juniper Research.

With just a month to go, 2016 looks set to be remembered as a tumultuous one for p2p and marketplace lending as the industry’s rapid growth hit several hurdles. Nonetheless, volumes have continued their upward trend and new platforms have continued to launch.

This growth will continue, says a new report by Juniper Research entitled Fintech Futures: Market Disruption, Leading Innovators & Emerging Opportunities 2016-2021,  with revenues earned by alternative finance platforms globally  to double from an expected $5.2bn this year.

The research claims that growth will be driven by a combination of factors including an acceleration in P2P lending, crowdfunding becoming a viable alternative to traditional lending mechanisms in a low interest rate environment, as well as the deployment of next generation analytics platforms that will make the matching of borrowers and lenders more efficient.

This includes loan applicants' social media activity, which could become a deciding factor for their loan applications, with suppliers developing equivalents to credit scores so that lenders can gauge their risk exposure.

The research also cautioned that the process might meet with greater consumer resistance in developed markets, with many would-be applicants likely to perceive the practice as an unwarranted invasion of privacy.

AltFi Data’s own number crunching shows that UK platform volumes are relatively strong in terms of origination, as shown in the graph below, with volumes record volumes clocked up post-Brexit.

Source: AltFi Data

In terms of crowdfunding AltFi Data also found in its latest report into the sector, Where Are They Now 2016, that the market is expanding rapidly. The total number of capital raises now stands at 955, spread across 751 companies, up from just 367 companies last year.