NESTA and The University of Cambridge have published The UK Alternative Finance Report 2014 titled ‘Understanding Alternative Finance’. The report outlines a market overview, awareness and perceptions of Alternative Finance, size, growth and trends of different platform models. The report also includes, facts, projections, case studies and diagrams.
The methodology by which NESTA and The University of Cambridge undertook research to conduct the report was a four stage process;
- Collecting and analysing relational and transactional data directly from a range of alternative finance platforms,
- Conducting primary research via questionnaires,
- Further primary research through external national surveys,
- Design and distribution of industry-wide tracking survey to distinguish latest industrial figures for 2014.
The report is dense with facts and information about the entire Peer-to-Peer process along with facts found about Alternative Finance in the UK.
NESTA and The University of Cambridge illustrate 44 facts concerning the Alternative Finance Industry in the UK. The facts are based on analysis of transaction data from a range of platforms, surveys of their users and commissioned national surveys of consumers and SMEs in the UK. The facts illustrated the tremendous growth seen throughout the industry from 2012 to 2014. This year, there has been an increase of 16% in market size growth. The Alternative Finance industry hit £1.74 billion in 2014 which was a huge increase from £267 million in 2012. £749 million worth of the £1.74 billion figure is from Peer-to-Peer business lending and a further £547 million derives from Peer-to-Peer consumer lending. Thus illustrating the P2P sector is picking up considerable traction from the interest in the Alternative Finance Industry. Invoice trading, Equity crowdfunding, Community Shares and Rewards crowdfunding were also high earners in 2014.
The report broke down each market platform, discussing data that was located.
In regards to Peer-to-Peer Business lending the report established that the average amount borrowed by a user of a platform was £73,222. 33% of Borrowers who gained funds through the sites did so as they were unable to gain funding from more traditional routes of finance such as high street banks. With funding gained, 63% of business saw growth with 53% seeing an increase in employment since securing funding. This is a hugely positive element for businesses as a whole and also for employment levels in the UK.
NESTA and The University of Cambridge research found that the average amount borrowed in 2014 for Peer-to-Peer Consumer lending was £5,471. The report stated that lenders are motivated by the high interest rates available through P2P platforms and 54% of lenders have lent more than £5,000. All in all, the report highlighted that the Peer-to-Peer industry is one that has seen massive growth within the past few years and has now gained a status within the finance industry to be a major player.
For the full NESTA Report please see here.