International Industry Reports

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Cambridge Centre for Alternative Finance

2021

The 2nd Global Alternative Finance Market Benchmarking Report

The 2nd Global Alternative Finance Market Benchmarking Report contributes 2019 and 2020 data, collected from financial technology firms that undertake digital lending and digital capital raising activities, to our globally comparable panel database on alternative finance. 821 firms provided 2019 data, while 703 firms reported on their 2020 activity via our global benchmarking survey. These survey responses translate to 1,801 firm-level observations for 2019 and 1,660 firm-level observations for 2020, given firms that operate in multiple jurisdictions (sometimes via a separate entity) report their activities in each market individually

Highlights from the report

  • China dominated the global online alternative finance market up until 2018. However, local market developments and regulatory changes have led to a considerable decline in volumes and its global market share. In 2019, the Chinese market accounted for 48% of the global volume, and in 2020 for only 1%. 

  • When we exclude the Chinese market from our analysis, it emerges that global online alternative finance market has grown consistently over the past three years. Global volumes (excluding China) rose by 3% from $89 billion in 2018 to $91 billion in 2019. And in 2020, despite COVID-19, the global market volume rose a further 24% year-on-year to reach $113 billion.  

  • The largest business model globally in 2019, when excluding China, P2P/Marketplace Consumer Lending remained the largest model type, with a total volume of $33.6 billion, accounting for 37% of the total global volume in 2019. In 2020, though still the largest single model, growth slowed down substantially, accounting for a total volume of $34.7 billion, or 31% of global market share.  

  • Accordingly, in 2020, the largest regional alternative market was the United States and Canada ($73.93 billion) with the US being the largest national market with $73.62 billion, which accounted for 65% of global online alternative finance market volume. This is followed by the UK ($12.64 billion), Europe excluding the UK ($10.12 billion), the Asia Pacific excluding China ($8.90 billion), LAC ($5.27 billion), SSA ($1.22 billion), China ($1.16 billion) and MENA ($0.59 billion). 

  • Donation-based crowdfunding experienced exponential growth, accounting for $7 billion globally in 2020. The leap in annual growth of 160% between 2019 and 2020, can be attributed largely to the flurry of COVID-19 related charitable, community and health-related online fundraising activities around the world. 

  • In 2020, alternative finance funding that went to micro, small and medium-sized enterprises (MSMEs) rose substantially. In 2019, global online alternative finance for business accounted for $35 billion, up 13% year-on-year and in 2020, increased significantly further by 51% year-on-year to $53 billion. By way of comparison, in 2019, business funding was 38% of the total volume, while in 2020 business funding accounted for 47% of the total volume.

  •  Institutional funding plays an important role in the functioning of the online alternative finance market, and increasingly so within the context of COVID-19. Based on data provided by 58% of the firm-level observations, we found that in 2019, approximately $28.5 billion of the market volume was financed by institutional investors, accounting for 16% of the entire global volume for that year. In 2020, based on 60% of the firm-level observations, approximately $43.6 billion of the market volume was financed by institutional investors, which represented 42% of the entire global volume. This represents a 53% year-on-year growth in the volume of institutional funding. 

Free download available HERE

Ziegler, T., Shneor, R., Wenzlaff, K., et al. (2021). The 2nd Global Alternative Finance Market Benchmarking Report, Cambridge, UK, Cambridge Centre for Alternative Finance.

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Cambridge Centre for Alternative Finance

2020

The Global Alternative Finance Market Benchmarking Report

For the first time, the CCAF has consolidated its annual regional reports to produce one global benchmarking report, with the intention of presenting world-wide online alternative finance data for 2018. This report presents the key findings from an annual global survey of online alternative finance. In all, 1,227 unique firms contributed to this study, providing 2,322 firm-level observations globally. Investigating in crowdfunding, P2P/marketplace lending or related capital raising activities, the study shows that 47 per cent of the firms were operating in two or more countries or jurisdictions.

Highlights from the report

  • In 2018, the global alternative finance industry facilitated USD $304.5 billion in transaction volume. This global alternative finance volume is representative of funds that were raised via an online alternative finance platform for consumers, business and other fundraisers. This volume represents a 27 per cent annual decline against the $419 billion recorded in 2017. However, this drop in global volume stems primarily from a sharp decline in alternative finance activities in China. Excluding the Chinese market, the global alternative finance market volume actually grew by 48 per cent year-on-year, from the $60 billion in 2017 to $89 billion In 2018.

  • China had the largest alternative finance volume by country, having generated a total of $215.37 billion in 2018. The United States ($61 billion) and the United Kingdom ($10.4 billion) came in second and third respectively. In 2018, five additional countries surpassed the $1 billion threshold of alternative finance market volume including the Netherlands ($1.8 billion), Indonesia ($1.45 billion), Germany ($1.27 billion), Australia ($1.16 billion) and Japan ($1.07 billion).

  • In 2018, online alternative business funding for start-ups and SMEs accounted for $82 billion, which fell by almost half from the high of $153 billion recorded in 2017. Much like the global total market volume, this significant reduction in alternative business funding was largely due to the sharp decline in business focused funding activity in China. Excluding China, global business funding through alternative channels increased from the $21 billion in 2017 to $31 billion in 2018. This represented a 47 per cent annual increase against the previous year.

  • Approximately $162 billion of alternative finance volumes directly stem from funding provided by institutional investors such as banks, pension funds, mutual funds and family offices. With the involvement of institutional investors on the rise, most regions were fairly equally split, with roughly 50 per cent of funding coming from the institutions and rest provided by retail investors.

Free download available HERE

Ziegler, T., Shneor, R., Wenzlaff, K., et al. (2020). The Global Alternative Finance Market Benchmarking Report, Cambridge, UK, Cambridge Centre for Alternative Finance.

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Cambridge Centre for Alternative Finance

2019

Shifting Paradigms:

The 4th European Alternative Finance Benchmarking Report

  • This year's study gathered data from 269 platforms with reported operations in 2017. These 269 platforms were responsible for 519 unique data entries across 45 countries in Europe. The study shows that the total European online alternative finance market (including the UK) grew by 36 per cent to reach €10.44 billion in 2017. The United Kingdom is still the largest individual alternative finance market, albeit with a declining market share from 73 per cent in 2016 to 68 per cent in 2017. Excluding the UK from overall volume, the European online alternative finance industry grew 63 per cent from €2.06 billion to €3.37 billion in 2017.

  • France (€661.37 million), Germany (€595.41 million) and the Netherlands (€279.93 million) remained the top three national markets for online alternative finance by market volume in Europe, excluding the United Kingdom.

  • For the fourth year in a row P2P Consumer Lending accounted for the largest market share of European Alterative Finance (excluding the UK). This model accounted for 41 per cent of all volume and grew by 99.8 per cent from €697 million in 2016 to €1.39 billion in 2017.

  • Online alternative finance for businesses across Europe continued to grow, providing €1.66 billion to over 24,000 businesses. Overall, European business funding grew by €534 million, and raised funds for an additional 9,586 businesses.

  • Internationalisation of platforms is on the rise. In 2017, 88 per cent of platforms reported some level of cross-border inflows, while 61 per cent reported outflows. This represents a growth of 11 per cent for platforms reporting cross-border inflows, and 17 per cent growth for those reporting cross-border outflows. Despite growth in international orientation of platforms, the extent of actual localisation of services, interface and brand remains limited.

  • While in 2016, models that were associated with larger volumes reported a higher level of change to their business model, the opposite trend was observed in 2017. For the top five model types by volume, 50 per cent or more of platforms reported making no changes to their business model. Product innovation, however, was high across the board.

  • As was observed in the previous year, most innovation focused on improving the operational efficiency of platforms through process streamlining and automation, as well as optimising payment processing and customer verification. Additionally, as with last year, the secondary research focus for platforms in Europe regards investment and development in customer service features, predominantly social media and promotional tools, community management, and CRM systems.

  • As regulatory regimes across Europe continue to develop, so to do the perceptions of platforms on the adequacy of these regulations. In general, while overall views are still divided, it appears that the level of approval has been increasing.

Free download available HERE

Ziegler, T., Shneor, R., Wenzlaff, K., et al. (2019). Shifting Paradigms - The 4th European Alternative Finance Benchmarking Report, Cambridge, UK, Cambridge Centre for Alternative Finance.

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Cambridge Centre for Alternative Finance

2018

Expanding Horizons:

The 3rd European Alternative Finance Industry Report

  • France, Germany and the Netherlands remain the top three national markets for online alternative finance by market volume in Europe (excluding UK), ). The French market reached €443.98m followed by Germany (€321.84m), the Netherlands (€194.19m), Finland (€142.23m), Spain (€130.90m), Italy (€127.06m) and Georgia (€102.58m), which experienced a boom in 2016. The United Kingdom maintains its position as the main alternative finance market, albeit with a declining market share from 81 per cent in 2015 to 73 per cent in 2016.

  • Estonia ranked first for alternative finance volume per capita with €62.68 for a second year in a row, followed by Monaco (€50.78) and Georgia (€27.58). On a per capita basis, France and Germany place twelfth and fourteenth, which contrasts to their positions when analysed in terms of absolute volume generated. Considerable shifts in overall rankings indicate that even countries with smaller online alternative finance volumes may have greater penetration and usage of these models. In almost every instance, high total volume does not necessarily reflect a strong correlation with per capita distribution rankings.

  • P2P Consumer Lending accounts for the largest market segment of Alternative Finance in Europe (excluding UK) for a third year in a row. This model accounted for 34 per cent of all volume, and grew by 90 per cent from €366m in 2015 to €697m in 2016. P2P Business Lending (17 per cent of market share), Invoice Trading (12 per cent), Equity-based Crowdfunding (11 per cent) and Reward-based Crowdfunding (9 per cent) rounded out the top-five performing models across the region. .

  • Institutionalization grew considerably from 2015 to 2016, with 45 per cent of P2P consumer lending and 29 per cent of P2P business lending funded by institutions such as pension funds, mutual funds, asset management firms and banks. 13 per cent of the investment in equity-based crowdfunding was also funded by institutional investors such as venture capital firms, angels, family offices or funds.

  • Online alternative finance for businesses continued to grow, providing €1126m to 14,521 businesses across the region. Debt models (including P2P Business Lending, Invoice Trading, etc.) accounted for 67 per cent of all business finance, while equity models (Equity-based Crowdfunding, etc.) accounted for 27 per cent. France (€218m), the Netherlands (€182m), Spain (€100m), Germany (€97m) and Italy (€88m) drove business-based alternative finance volumes, supporting their SME market through a variety of models

Free download available HERE

Ziegler, T., Shneor, R., Garvey, K., et al. (2018). Expanding Horizons: The 3rd European Alternative Finance Industry Report, Cambridge, UK, Cambridge Centre for Alternative Finance.