Europe’s Peer-to-Peer Lending Market

Europe’s Peer-to-Peer Lending Market

by August 4, 2017
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Peer-to-peer (P2P) lending has become a popular alternative to traditional bank loans for both businesses and individuals. The global P2P lending market was valued at US$26 billion in 2015 and is projected to reach US$460 billion by 2022, growing at a compound annual growth rate of 51.5% from 2016 to 2022, according to Research and Markets.

Image by venimo via Shutterstock.com

P2P lending allows companies and individuals to borrow directly from tens, sometimes hundreds, of people who are ready to lend. Lenders often bid for loans by offering an interest rate at which they would lend. Borrowers then accept loan offers at the lowest interest rate. Internet-based platforms are used to match lenders with borrowers.

The P2P lending industry has seen robust growth in developed economies of Europe and North America. The US has the largest P2P lending market in the world followed by Europe.

2016 marked a significant year for Europe’s online alternative finance market, which demonstrated clear signs of continued strong growth and increased maturation in the sector as a whole.

The European online alternative finance market, including crowdfunding and P2P lending, grew by 92% in 2015 to €5.4 billion, according to a survey conducted by the Cambridge Center for Alternative Finance At the University of Cambridge Judge Business School, in partnership with KPMG and supported by the CME Group Foundation.

The UK dominates the European online alternative finance landscape, representing 81% of the overall market in 2015 with a volume of €4.4 billion. Top P2P lending platforms by volume include Funding Circle, Assetz SME Capital and Folk2Folk for business lending, and Zopa, Rate Setter and Funding Secure for consumer lending, according to data provided by AltFi Data.

 

Continental Europe catching up on P2P lending

According to Jevgenijs Kazanins, CEO of Twino, while the UK still leads the way for alternative finance, Continental European lenders are quickly catching up.

“We believe that alternative finance will continue to grow quickly in Continental Europe, potentially to the detriment of the UK as the effect of the Brexit vote begins to weigh on the British economy,” he said.

P2P lending europe 2

Image by koya979 via Shutterstock.com

France, Germany and the Netherlands are the top three countries for online alternative finance by market volume in Europe, excluding the UK.

The French market reached €319 million in 2015, followed by Germany with €249 million, the Netherlands with €111 million, Finland (€64 million), Spain (€50 million), Belgium (€37 million) and Italy (€32 million). Nordic countries collectively registered €104 million, and Central and Eastern European countries totaled €89 million.

P2P consumer lending is the largest market segment of alternative finance in Europe with €366 million in 2015. P2P business lending is the second largest segment, collecting €212 million in 2015.

Online alternative business funding increased by 167% year-on-year, with startups and SMEs across Europe raising €536 million. Total debt-based funding for SMEs reached €349 million in 2015 with 156% year-on-year growth, driven largely by the growth of P2P business lending.

Top P2P lending platforms for business lending in Continental Europe include Lendix, a French firm that also serves the Spanish and Italian markets, the Netherlands’ Geldvoorelkaar.nl, and Spain’s LoanBook Capital.

Leading consumer lending platforms by volume in Continental Europe are Latvia’s Mintos, Germany’s Auxmoney and France’s Younited.

Auxmoney recently joined hands with Europe’s challenger bank N26. The partnership allows the bank to expand its range of loans on offer, opening up options for the self-employed, freelancers and students.

The loans will range from €1,000 to €25,000 with terms range from 12 to 60 months and interest rates beginning at 3.95% per annum.

N26 is a fully-licensed, mobile-first challenger bank from Germany serving over 300,000 across Europe.

Twino, a P2P lending platform from Latvia, began serving Kazakhstan in July. Kazakhstan is the sixth country listed on the platform, which included the UK, Spain, Russia and Poland.

“The expansion to Kazakhstan is a hugely important milestone for us and we’re proud to be the first European peer-to-peer platform to expand to Central Asia,” said Jevgenijs Kazanins, P2P platform lead at Twino.

 

Biggest Lending/Fintech Conference in London

LendIt, one of the largest conferences series dedicated to connecting the global online lending and fintech communities, is coming to London on October 09 and 10, 2017 for an event that is expected to gather over 1,000 participants, 500 companies and 150 investors from all around the world.

This year’s conference will cover the hottest topics in the fintech industry from blockchain technology and insurtech, to digital banking and more. Confirmed speakers include representatives from Zopa, IBM, UBS Smartwealth, RateSetter, Microsoft, and more.

The event will also feature the PitchIt startup competition, which will allow startups from across EMEA to present their solution in front of the LendIt audience of international investors and industry leaders.

Get 15% Discount with Code “FNSwitzerlandVIP”. Register here!

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Featured image by Julia Tim via Shutterstock.com.

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