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Cambridge University study says UK is 3rd globally for alternative finance

The most active country is China ($89bn) followed by the US ($61bn) with the UK trailing behind in third place ($10.4bn).

a man in a suit

Dr Robert Wardrop/Judge Business School, University of Cambridge

A benchmarking study by Cambridge Centre for Alternative Finance (CCAF) release on Friday provides an insight into the $300bn alternative finance industry. 

When it comes to alternative finance activity, the UK is the most active country in Europe and third globally with $10.4bn worth of transaction volumes in 2018.

The study interviewed 1,227 unique firms, of which 87 were based in the UK.

In 2018 the UK accounted for 57per cent of the overall European market, however, the UK’s relative share has declined from 68 per cent in 2017, and a massive 81 per cent in 2015.

This decrease doesn’t necessarily show a contraction of the UK’s alternative finance market, rather other European markets are catching up to the UK, overall the European alternative finance market grew from $11.9bn in 2017 to $18bn in 2018—a 52 per cent increase.

Similarly, there was a notable increase in the number of firms operating in multiple jurisdictions, with an increasing amount of cross-border activities across most regions in almost all business models—especially P2P consumer lending, balance sheet business lending, debt-based securities, invoice trading and equity crowdfunding.

Dr Robert Wardrop, co-founder and director of the CCAF, said: “This global report sheds light on the evolving landscape and market dynamics of the online alternative finance industry which are now providing substantial sources of funding for consumers, start-ups, small and medium-sized enterprises, and industrial verticals ranging from the manufacturing sector to creative industries.”

“The number of participating firms and their geographical spread means that this benchmarking research provides the most robust and globally comparative database currently available.” 

Across Europe, the proportion of female-led fundraising campaigns was below a third, but the UK had the highest proportion at 31 per cent. Despite this, the UK had less female funders than other regions across Europe, with the Balkans coming out on top with 51 per cent, and the UK has just 33 per cent.

In 2018, $6bn, or 58 per cent of the UK’s total alternative finance volume, was raised for business borrowers, issuers and fundraisers, a 7 per cent increase in the volume against the previous year.

The largest chunk of the UK’s alternative finance spending was for P2P Business lending, accounting for nearly a quarter of the total amount spent at $2.5bn, this figure also placed it second globally for P2P business lending.

Closely following behind P2P business lending was P2P Consumer lending which accounted for $2.1bn in 2018.

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