Digital Lending Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Digital Lending Market is Segmented by Type (Business, Consumer), and Geography.

Market Snapshot

Study Period:

2018 - 2026

Base Year:

2020

Fastest Growing Market:

Asia Pacific

Largest Market:

North America

CAGR:

11.9 %

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Market Overview

The Digital Lending Market is expected to register a CAGR of approximately 11.9% during the forecast period (2021 - 2026). Due to the Covid-19 pandemic, SMEs across the globe faced challenges to raise funds during the crisis to keep their businesses operating.

  • Digital Lending is expected to find several opportunities during the pandemic, especially amongst the SMEs for growth and adoption. For instance, in April 2020, IndiaLends launched Digital Lending 2.0, a range of touchless and contactless products, including loans, insurance, and a line of credit. The new offering is expected to provide its consumers with quick and effective financial solutions during and after the nationwide lockdown paving the way for a new normal.
  • The lending landscape has changed drastically over the years due to the rapid adoption of digitization in the BFSI industry. The traditional form of lending still prevails in many parts of the world. However, the benefits provided by the digital solution providers are increasingly paving the way for the adoption of digital lending solutions and services across the enterprises.
  • Another major factor driving the growth of the market studied is the changing consumer expectation and behavior due to the several benefits offered by the digitization of banking and financial services. The customers may range from diversified backgrounds and may require the loan for a variety of purposes ranging from personal loans to SME finance and home loans, amongst many others.
  • Further, the adoption of several technological advancements, such as the proliferation of adoption of smartphones has led to an increase in the adoption of digital banking across several end-user verticals. Also, technologies like Artificial Intelligence, Machine Learning, and Cloud Computing benefit the banks and fintech as they can process huge amounts of information about customers. This data and information are then compared to obtain results about suitable services/solutions that customers want, which has aided, essentially, in developing customer relations.
  • Aire, Kabbage, and Kasisto are some of the most prominent financial sector startups that have fully invested in AI. For instance, Kabbage uses AI algorithms that assess all risks of lending money to a certain customer, and it allows managers of the company to give loans in minimal time. The demand for personalization of their needs among consumers in the fintech and banking companies have further strengthened the demand for AI.

Scope of the Report

Digital Lending is a mix of traditional credit facilities from banks, NBFCs, and innovative financing mechanisms in a digital lending platform, which is critical for the growth of the MSME sector. The study on digital lending includes coverage on demand dynamics of online lending or alternative lending (non-bank) options available for both Businesses and Consumers.

Type
Business
Business Digital Lending Market Dynamics
Business Digital Lending Ecosystem (including both Startups and Incumbents)
Consumer
Consumer Digital Lending Market Dynamics
Consumer Digital Lending Models (Payday Lenders, Peer-to-peer Loans, Personal Loans, Auto Loans, and Student Loans)
Consumer Digital Lending Ecosystem (including both Startups and Incumbents)
Geography
North America
United States​
Canada
Europe​
United Kingdom
Germany
France
Rest of Europe
Asia Pacific
China
India
Japan
Rest of Asia Pacific
Rest of the World

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Key Market Trends

Increasing Number of Potential Loan Purchasers with Digital Behavior

  • The latest Expectations & Experiences consumer trends survey from Fiserv, Inc. a leading global provider of financial services technology solutions, states that almost two thirds of people who have applied for loans in the past two years now do so either partially or fully online, representing a significant increase from 2018. A major portion of this growth is due to increasing usage of smartphone and tablet.
  • Millennials who have a few years of work experience and no credit history (or the new-to-credit segment) find that their loans are either not approved, or come at high rates of interest. Moreover, in traditional banks, the time to decision for small businesses and corporate lending averages between three and five weeks; Average time to cash is nearly three months. Such challenges are driving the digital behavior of customers who are turning to mobile devices in order to access the digital lending applications.
  • The increase in digital behavior is also augmented by government regulations. For instance, in September 2020, Thailand's central bank published new measures for the growing digital personal loan market. It also recommended that loan providers apply more digital technology for operational processes such as loan offering, debt repayment, and information disclosure, such as interest rates, fees, and penalties.

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Asia-pacific is Expected to Exhibit a Significant Growth Rate

  • China’s online lending sector has seen rapid growth in the past decade owing to lack of significant regulations, which has led to an increase in the number of players in the market studied. However, after the first sign of turmoil in 2015 when Ezubao, one of the largest lenders at the time with 900,000 investors, was brought down for fraudulent transactons. China’s regulators began to impose increasingly strict policies, which included the appointment of a custodian bank, full disclosure on the use of investments, and caps on the maximum lending amounts that may be extended to individuals (CNY 1 million) and companies (CNY 5 million).
  • The rapid adoption of smartphones, internet access, and a shift toward consumerism in India helped fuel the growth of digital lending enterprises. There are currently 338 online lending start-ups in India that are trying to reduce the gap between lender and creditor through a seamless process.
  • Moreover, the government of Japan is launching programs to inculcate cashless behaviors in citizens. The government launched an initiative to increase cashless payments to 40% by 2025. With the increase of the consumption tax from 8% to 10% on October 1, 2019, several discount schemes were implemented, which has subsidizing the installation of cashless payment terminals for merchants and providing 2% or 5% discounts for consumers, when purchasing from registered SMEs or franchise stores.

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Competitive Landscape

The competitive landscape of the Digital Lending Market is fragmented owing to the presence of several solution providers, with none of them holding a majority share in the market. The market players are making several innovations to improvise their offerings and gain maximum market traction. The emerging players in the market are strategically raising funds to provide innovative and technologically integrated solutions. The market players are also viewing strategic collaborations as a lucrative path towards growth.

  • June 2020 - A Mumbai-based digital loan provider, InCred, with loans, such as home loans, business loans, and personal loans, acquired Qbera, another digital lending platform. With the acquisition of Qbera, InCred is aiming to strengthen its digital distribution business.
  • January 2020 - PayU, the payments, and fintech business of Prosus, created a new digital lending provider in India through the merger of LazyPay, PayU’s consumer lending business, with PaySense, one of India’s fastest-growing digital credit platforms.
  • August 2019 - Tala, a digital lending startup, raised USD 110 million funding for expansion in India.

Recent Developments

  • Dec 2020 - Nucleus Software, a provider of lending and transaction banking solutions to the global financial services industry, launched the FinnOne Neo 5.5, the latest version of its digital lending platform. This version has been designed specifically to help lenders rapidly expand business operations and generate new digital revenue streams by targeting new customer segments. It will also enhance their digital portfolio rapidly and deliver endto-end contactless banking.
  • Aug 2020 - ANZ launched a new online lending platform to provide small businesses with conditional approval for up to AUD 200,000 in unsecured lending in as little as 20 minutes. It is developed in partnership with DemystData, ANZ Online Business Lending syncs with Accounting Software Platforms (ASPs) Xero, QuickBooks and MYOB. Businesses will be able to connect their ASPs to the bank’s credit platform to share historical financial information, allowing ANZ to provide a decision on conditional lending in less than 20 minutes and full approval within two days.

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Table Of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions & Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKETDYNAMICS

    1. 4.1 Market Overview

    2. 4.2 Industry Stakeholder Analysis

    3. 4.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.3.1 Bargaining Power of Suppliers

      2. 4.3.2 Bargaining Power of Consumers

      3. 4.3.3 Threat of New Entrants

      4. 4.3.4 Intensity of Competitive Rivalry

      5. 4.3.5 Threat of Substitute Products

    4. 4.4 Important Touchpoints of Potential Loan Purchasers

    5. 4.5 Impact of COVID-19 on the Digital Lending and Allied Markets 

  5. 5. MARKET DYNAMICS

    1. 5.1 Market Drivers

      1. 5.1.1 Increasing Number of Potential Loan Purchasers with Digital Behavior

    2. 5.2 Market Challenges

      1. 5.2.1 Security concerns

  6. 6. MARKET SEGMENTATION

    1. 6.1 Type

      1. 6.1.1 Business

        1. 6.1.1.1 Business Digital Lending Market Dynamics

        2. 6.1.1.2 Business Digital Lending Ecosystem (including both Startups and Incumbents)

      2. 6.1.2 Consumer

        1. 6.1.2.1 Consumer Digital Lending Market Dynamics

        2. 6.1.2.2 Consumer Digital Lending Models (Payday Lenders, Peer-to-peer Loans, Personal Loans, Auto Loans, and Student Loans)

        3. 6.1.2.3 Consumer Digital Lending Ecosystem (including both Startups and Incumbents)

    2. 6.2 Geography

      1. 6.2.1 North America

        1. 6.2.1.1 United States​

        2. 6.2.1.2 Canada

      2. 6.2.2 Europe​

        1. 6.2.2.1 United Kingdom

        2. 6.2.2.2 Germany

        3. 6.2.2.3 France

        4. 6.2.2.4 Rest of Europe

      3. 6.2.3 Asia Pacific

        1. 6.2.3.1 China

        2. 6.2.3.2 India

        3. 6.2.3.3 Japan

        4. 6.2.3.4 Rest of Asia Pacific

      4. 6.2.4 Rest of the World

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Company Profiles

      1. 7.1.1 Funding Circle Limited​ (Funding Circle Holdings PLC) ​

      2. 7.1.2 Bizfi LLC​

      3. 7.1.3 On Deck Capital Inc.

      4. 7.1.4 Prosper Marketplace Inc.

      5. 7.1.5 LendInvest Limited​

      6. 7.1.6 LendingClub Corp.

      7. 7.1.7 Zopa Limited

      8. 7.1.8 Social Finance Inc.

      9. 7.1.9 Upstart Network Inc.

      10. 7.1.10 Kiva Microfunds

      11. 7.1.11 Kabbage Inc.

      12. 7.1.12 CAN Capital Inc. 

      13. 7.1.13 Lendingtree Inc.

    2. 7.2 Additional Company Profiles

      1. 7.2.1 Kaspi Bank JSC

      2. 7.2.2 Klarna Bank AB

      3. 7.2.3 Ferratum Oyj

      4. 7.2.4 Provident Bank (Provident Financial Services Inc.)

      5. 7.2.5 International Personal Finance PLC (IPF)

      6. 7.2.6 Oriente

      7. 7.2.7 Faircent

      8. 7.2.8 LenDenClub

      9. 7.2.9 CapFloat Financial Services Private Limited

      10. 7.2.10 Transactree Technologies Private Limited (LendBox)

      11. 7.2.11 Monexo

      12. 7.2.12 i-LEND

      13. 7.2.13 Decimal Technologies Pvt. Ltd.

  8. *List Not Exhaustive
  9. 8. INVESTMENT ANALYSIS AND MARKET OPPORTUNITIES

**Qualitative Analysis for the Sub-segment

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