Alternative Lending transaction value forecast in United Kingdom 2019-2023, by segment

The economic meltdown of 2008 resulted in drastic changes in the UK’s and indeed the world’s financial markets. Even though the markets have clawed their way back over the last decade to reach pre-crash levels, the industry has undergone some fundamental changes. One such change is the rise of global alternative lending which has come as a boon for people with past credit problems or unusual income. The UK’s alternative lending market, which was the third highest globally in terms of transaction value, in 2018, is expected to increase from 3.8 billion U.S. dollars in 2017 to around 4.8 billion U.S. dollars by 2023. Crowdlending for business purposes is expected to account for a majority of revenues ahead of personal marketplace lending. The number of loans is expected to be higher in the latter category though.

Full automation is the way forward

According to industry experts, complete automation is the future of the alternative lending industry. Technologies such as machine learning (ML), robotics and data analytics are already providing start-ups with capabilities to assess an individual’s eligibility, process documents and offer a customized quote, all without manual intervention. This not only results in greater efficiencies but also reduces cost and human error, which in turn leads to lower interest rates for the end consumer.

FinTech - Alternative Lending transaction value forecast in United Kingdom 2019-2023, by segment

Crowdlending (Business)Marketplace Lending (Personal)
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Source

Release date

March 2019

Survey time period

2018

Supplementary notes

The Alternative Lending market segment relates to digital financial services for business customers as well as private borrowers. The market includes bank-independent loan allocation for SMEs (Crowdlending) and for personal loans (Marketplace Lending or so-called Peer-to-Peer lending) through private or institutional investors via online platforms (e.g. OnDeck, LendingClub, Prosper). In view of processing complexity, this market is focused on small and medium-sized enterprises (SMEs), freelancers and private persons. Bank financing is not considered, neither are any financial aspects that reach beyond the scope of small and medium-sized enterprises or donation-based Crowdfunding models.

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