In 2023, Switzerland’s marketplace lending witnessed a significant contraction, with the volume of new debt capital issued on online platforms falling by 10.8% year-over-year (YoY) to approximately CHF 18.6 billion, a joint report by the Lucerne School of Business and the Swiss Marketplace Lending Association (SMLA) says.

The Marketplace Lending Report Switzerland 2024, released in October, provides a comprehensive analysis of online debt financing trends for corporations, public entities, and private individuals in Switzerland. It focuses on online platforms directly connecting lenders and borrowers, offering an overview of the current state and emerging trends within the Swiss marketplace lending landscape.

This year’s report reveals a decline in marketplace lending volumes, with key subsegments of the markets, including crowdlending and mortgage financing, facing the steepest drops.

In 2023, crowdlending plummeted by 20% YoY to CHF 389.1 million in new loans, down from CHF 497.5 million in 2022. Similarly, mortgage loans brokered on platforms and financed by institutional and professional investors fell by 20%, falling from CHF 6.2 billion in 2022 to CHF 5 billion in 2023.

Meanwhile, the subsegment of loans and bonds targeting mid-sized and large corporations, as well as public and near-public entities, showcased the most resilience, declining by just 6.7% YoY to CHF 13.2 billion.

Crowdlending: a market led by real estate but in decline

Within crowdlending, real estate continued to lead the subsegment, generating CHF 203.9 million in 2023 and accounting for 52.4% of the market. The sum, however, represents a major YoY decline of 27.9% from CHF 282.7 million in 2022.

That volume mainly consisted of loans to companies in the real estate development business, many of which were issued as short-term credits, later redeemed by banks.

Business crowdlending was the second-largest subsegment, contributing CHF 132.8 million or 34.1% of the market. While it saw a milder drop of 6.4% YoY, this performance reflects ongoing interest despite broader market pressures.

At the end of 2023, 16 crowdlending platforms were active in Switzerland, with increased involvement by banks and insurance companies, as well as market consolidation, the study found.

Lend acquired Lendico from PostFinance in 2019, and in a reciprocal move, PostFinance acquired a stake in Lend; Basellandschaftliche Kantonalbank is a strategic investor in Swisspeers; and Funders is a platform launched by Luzerner Kantonalbank in 2016.

Mortgage loans witness first decline in a decade

In 2023, the mortgage brokerage subsegment recorded its first decline in ten years, reaching approximately CHF 5 billion, down from CHF 6.2 billion in 2022.

The report anticipates that in 2024, some platforms will exit the business-to-consumer (B2C) mortgage market, with further consolidation expected moving forward. This will be driven by a number of factors, including a lower growth rate than expected, as well as relatively low margins per transactions, it says.

At the end of 2023, 12 different platforms operated in the mortgage vertical, serving a professional investor base of banks, insurance companies and pension funds as lenders.

Key players included UBS key4 mortgages, through which UBS offers its own mortgages and mortgages from third parties, and BrokerMarket from Thurgauer Kantonalbank, which operates as an intermediary platform connecting mortgage borrowers with lenders through mortgage brokers. Several independent mortgage brokerage firms were also present, including RealAdvisor, Resolve, topHypo ,Hypohaus, PropertyCaptain and Hypo Advisors.

Loans and bonds for public entities and corporations

Finally, loans and bonds for entities and corporations, another key subsegment in the Swiss marketplace lending landscape, remained a dominant force within the sector in 2023, capturing a 71% share of the market with CHF 13.2 billion in new loans issued.

This section includes two types of loans or private placements: firstly, the online market for loans to public or near-public entities; and secondly, the market for loans to mid-sized and large corporations. Investors in both subsegments are banks and institutional and professional investors, such as asset managers, family offices and pension funds.

Two market participants were currently active in this segment in Switzerland in late 2023. Loanboox, launched in 2016, has grown rapidly in the loan market for public entities with now more than 3,000 transactions and CHF 30 billion in volume closed. Cosmofunding, meanwhile, is a platform launched in 2018 by Bank Vontobel. The company focuses on public and corporate borrowers.

Featured image credit: edited from freepik