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Report: Alternative finance volumes grew 24% in 2020

The coronavirus pandemic failed to knock the growth of non-bank lending and capital raising off course.

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Global alternative finance volumes grew by 24 per cent in 2020, despite the pandemic disruption, according to new research from academics at Cambridge University's Judge Business School.

The findings come as part of the 2nd Global Alternative Finance Market Benchmarking Study, which mostly deals with with lending by non-bank platforms such as peer-to-peer lenders but also encompasseses equity crowdfunding and donation-based crowdfudning.

It found the total volume of digital lending and digital capital raising (excluding that which occurred in China) grew 27 per cent from 2018 to 2020 to $113bn. Most of this growth (24 per cent) occurred in 2020.  

China is extrapolated owing to a crackdown on lending by non-banks by authorities in recent years.

A number of trends also present themselves when drilling into the data. Firstly, the soaring success of institutional capital within the alternative finance market. Non bank lenders now have on average more than two-thirds of their total finance provided by institutional investors.

In addition the boom in lending to the small businesses market. SME-focused P2P/marketplace and balance sheet lenders reported the highest growth in terms of institutional funding volumes, and accounted for $13bn and $21.2bn in 2020, respectively.

The overall volume of online alternative finance (not including China) that went to small and medium-sized businesses rose from $35bn in 2019 to $53bn in 2020 – a 51 per cent increase year-on-year.

US and Canada is now the largest regional alternative finance market ($73.93bn), followed by the UK ($12.64bn) and APAC (also not including China) ($8.9bn)

The report includes 2019 and 2020 data, with 821 firms providing 2019 submissions and 703 firms providing 2020 submissions.

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