While crowdlending in Asia Pacific shows early promise, its fate will be dictated by how regulators and banks respond to the challenges they pose.
May 03, 2016 | ResearchNew developments in financial technology, the improved availability of public personal information, better internet bandwidth, minimal regulations, and underdeveloped or concentrated markets have given rise to alternative lending platforms. One of these is crowdlending, which connects lenders with borrowers without the intermediation by banks. Unlike banks, crowdlending platforms generally do not earn a margin on the loan, instead they charge fees.
The main distinguishing factor to (equity) crowdfunding is that the borrower has the obligation to pay back the money with a fixed payment schedule and at a fixed interest rate.
Since there is an obligation to pay back from the beginning, loans are only given to companies or projects that are already generating cash.
Crowdlending is expected to grow to over $800 billion in terms of loans origination by 2020. Specifically, Asia Pacific, mainly driven by China, is forecast to overtake other regions, with a projected 72% share of aggregated loan issuance (Figure 1).
Crowdlending is expected to grow into an $800 billion industry by 2020
Source: The Asian Banker Research
Crowdlending in Asia Pacific countries
In 2015, around 2,600 P2P lenders representing 96% of the roughly 2,700 crowdlenders in the region were based in China, from where $150 billion worth of loans originated (Figure 2).
China is a crowdlending giant in the Asia Pacific
Source: The Asian Banker Research
China
Although China’s total loan origination is valued at around $113 billion by local Chinese crowdlendin...
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Data & Analytics, Markets & Exchanges, Retail Banking, Technology & OperationsKeywords:Crowdlending, Loans, Sme Loans, Personal Loans, Fintech, Retail Bank, P2P, Technology, Regulators, Business Models, Alternative Finance, China, Australia, Singapore, CreditEase, MoolahSense, RateSetter, DirectMoney
