The UK generated nearly $US2.3 billion in peer-to-peer (P2P) loans in 2014, making its alternative lending market the largest in the world on a per capita basis. To illustrate,
72% more lending volume is transacted in the UK than in the US per person.
The UK’s success in P2P lending can be largely attributed to a positive regulatory environment and consumer attitudes that are wary of traditional banking. Now, continental Europe is following UK’s lead, generating significant activity over the past three years: countries with large economies that weren’t generating any revenue in P2P business lending are processing millions.
In a new report from BI Intelligence, we analyse the factors that have helped nurture the most successful markets for peer-to-peer lending, identify the next high-growth markets, and assess the risks that could stall the industry’s progress. We also provide a companion report explaining how P2P lending works and why it solves the inefficiencies of the traditional lending model.
Here are some of the key takeaways:
- The UK’s P2P lending market is 72% larger than the US’ on a per capita basis.
- Consumer attitudes and habits in the UK lend themselves to a thriving alternative finance market.
- High mobile and internet penetration: Mobile and internet penetration in the UK were 131% and 84%, respectively, in 2014. That internet penetration rate is among the highest in the world, while mobile penetration is one percentage point lower than EU frontrunner Germany.
- Early adopters of e-commerce: In 2012, the UK’s consumer e-commerce spend per capita was $US1754, higher than other developed nations like the US, France, and Germany.
- Faster adoption of new payment methods: The UK launched the UK Faster Payment service in 2008, allowing UK citizens to receive mobile and online payments within minutes. Other developed countries like the US, meanwhile, are still debating how to implement a real-time system.
- Europe is the next big market for P2P lending: The alternative finance market in Europe reached nearly €3 billion ($US3.9 billion) in 2014, a 144% jump, and small-business P2P loan volume in France grew almost 4,000% last year, to reach €8.2 million ($US10.6 million).
- Although the industry is flourishing, there are serious risks that could derail it: Interest rate hikes, new regulations, frayed bank relationships, and other factors could put a stop to the industry’s current surge.
In full, the report:
- Charts out the size of the alternative finance market in Europe through the end of 2015.
- Provides the peer-to-peer lending volumes for UK and the rest of Europe, along with a country-by-country breakdown.
- Compares the US and UK peer-to-peer lending markets, including on a per capita analysis.
- Identifies the next high-growth markets for peer-to-peer lending, including growth rates.
- Examines the risks that could negatively impact the peer-to-peer lending industry.
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