Ever since the financial crisis of 2008 the UK’s major banks have been lumbered with more stringent policies and regulatory obligations that prevent them from meeting the needs of lenders and borrowers across the country. Borrowers are keener than ever to obtain lower interest rates and access to credit lines; whilst lenders continue to search for higher returns on their investments.
This has created a gap in the market for the expansion of alternative finance solutions, such as Peer-to-Peer lending. A recent report from BI Intelligence has analysed the factors that have helped this market grow and also identified those markets that should expect high growth in the future. The report has also assessed the risks that could delay the industry’s progress.
Here are some of the main points to be taken from the report:
Significant Growth in Developed Countries
Countries with strong financial markets are witnessing significant growth within the Peer-to-Peer Industry. Using the US as an example, $6.6 billion was generated in loans last year, an increase of 128% from the year previous.
Low Confidence in Major Banks
Consumer confidence in major banks is at an all-time low and people are starting to portray a high level of comfort with online alternative platforms. A positive regulatory environment has also helped develop the UK’s Peer-to-Peer lending industry. The figures back this up too as the UK’s P2P lending market is 72% larger than the US (per capita). By volume, the US has one of the largest Peer-to-Peer lending markets across the globe.
Next up – Europe!
The next big market for Peer-to-Peer lending is Europe, where the alternative finance market stretched to almost €3 billion last year. This represents a 144% increase on the year before. In France alone, the Peer-to-Peer loan volume for SMEs shot up by approximately 4,000% and reached €8.2 million. It is important to note that the UK dominates the P2P lending market in Europe and makes up 84.28% followed by Germany at 4.35% then France at 3.23%.
What Could Possibly Hold the Industry Back?
The industry is in full flourish at present but there are some risks that could potentially hold proceedings back slightly. The introduction of new regulations and interest rate changes could stall the industry’s rapid rise somewhat, although this may be a necessary evil. Wellesley & Co. understand that regulations are indeed required but should be balanced appropriately to sustain growth and continue meeting the needs of borrowers/lenders.
All risks associated with investment through Wellesley & Co. are outlined clearly on our website, and our Customer Service Team are available for any further information. Call 0800 888 6001 or email [email protected].