Alternative Finance Market Growth, Size, Trends, Analysis Report by Type, Application, Region and Segment Forecast 2021-2025
- Published: Apr 2021
- Pages: 117
- SKU: IRTNTR44221
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The alternative finance market share is expected to increase by USD 176.15 billion from 2020 to 2025, and the market's growth momentum will accelerate at a CAGR of 10%.
This alternative finance market research report provides valuable insights on the post COVID-19 impact on the market, which will help companies evaluate their business approaches. Furthermore, this report extensively covers alternative finance market segmentations by type (P2P lending, crowdfunding, and invoice trading) and geography (APAC, North America, Europe, South America, and MEA). The alternative finance market report also offers information on several market vendors, including CircleUp Network Inc., Crowdfunder Ltd., Fundable LLC, Funding Circle Holdings Plc, Fundrise LLC, GoFundMe Inc., Indiegogo Inc., Kickstarter PBC, LendingClub Corp., and Patreon Inc. among others.
What will the Alternative Finance Market Size be During the Forecast Period?
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Alternative Finance Market: Key Drivers, Trends, and Challenges
Based on our research output, there has been a negative impact on the market growth during and post COVID-19 era. The better returns for investors is notably driving the alternative finance market growth, although factors such as high risk of credit default may impede market growth. Our research analysts have studied the historical data and deduced the key market drivers and the COVID-19 pandemic impact on the alternative finance industry. The holistic analysis of the drivers will help in deducing end goals and refining marketing strategies to gain a competitive edge.
Key Alternative Finance Market Driver
One of the key factors driving the alternative finance market growth is the better returns for investors. Alternative finance offers better returns for investors compared with fixed deposits (FDs) or the bonds offered by traditional financial institutions. The average yield on FDs or 10-year government bonds in developed countries such as the UK and the US is around 1%-3%, and alternative finance investment platforms such as LendingClub and Funding Circle provide returns at a theoretical average of 7%. Though bank savings and bond yield rates in developing countries are similar to those provided by alternative finance platforms, new investors are emerging in these countries due to the quicker return on investment (ROI). Alternative finance operators can provide a higher rate of ROI due to their lower operating costs compared with banks and other financial institutions. Online alternative finance platforms have almost no physical assets such as offices and have low human resource and operating costs, low cost of capital acquisition, and low collection and billing costs. This is because all transactions with investors and debtors take place online. Hence, alternative finance operators provide better returns to investors.
Key Alternative Finance Market Trend
Another key factor driving the alternative finance market growth is the rapid growth in APAC. Alternative finance platforms, including P2P lending, crowdfunding, and invoice trading, are growing in APAC due to the presence of several SMEs. The number of SMEs has increased significantly in Asian countries. For instance, the number of SMEs in China was approximately 18.07 million by the end of 2018. Similarly, according to the data published by the Ministry of Micro, Small and Medium Enterprises (MSMEs), as of March 2020, there were 63.3 million (6.33 Crore) SMEs present across India. The growing number of SMEs in APAC is increasing the demand for alternative financial services and platforms for business growth. Alternative finance solutions and service providers are helping SMEs by strengthening their access to credit and equity, which, in turn, enables SMEs to invest in growth. Moreover, growing Internet penetration, coupled with the use of smartphones, is encouraging people in APAC to use P2P lending and crowdfunding platforms. This, in turn, is expected to propel the growth of the global alternative finance market in the coming years.
Key Alternative Finance Market Challenge
High risk of credit default is one of the key challenges hindering the alternative finance market growth. Alternative finance funds borrowers lack collateral assets and credit history or have poor credit ratings. Therefore, they do not qualify for loans from traditional financial institutions as the chance of defaulting is high. The high risk of credit default discourages many financers from investing in alternative finance, which forces alternative finance intermediaries and operators to decline many borrowers or charge a higher rate of interest. The rate of credit default for almost all major lenders such as Prosper Marketplace, LendingClub, and Funding Circle has been significantly higher than their initial projections. For instance, the default rates for LendingClub and Prosper Marketplace on loans with a payback period of three years or more average at around 10%-14%. High-risk lenders such as Bondora Capital, which provide loans to customers with very poor creditworthiness, have a credit default rate of up to 25%-30% of their overall loan volume. The high risk of credit default may discourage potential investors from investing in alternative finance, which could affect the growth of the market.
This alternative finance market analysis report also provides detailed information on other upcoming trends and challenges that will have a far-reaching effect on the market growth. The actionable insights on the trends and challenges will help companies evaluate and develop growth strategies for 2021-2025.
Parent Market Analysis
Technavio categorizes the global alternative finance market as a part of the global specialized consumer services market. Our research report has extensively covered external factors influencing the parent market growth potential in the coming years, which will determine the levels of growth of the alternative finance market during the forecast period.
Who are the Major Alternative Finance Market Vendors?
The report analyzes the market's competitive landscape and offers information on several market vendors, including:
- CircleUp Network Inc.
- Crowdfunder Ltd.
- Fundable LLC
- Funding Circle Holdings Plc
- Fundrise LLC
- GoFundMe Inc.
- Indiegogo Inc.
- Kickstarter PBC
- LendingClub Corp.
- Patreon Inc.
This statistical study of the alternative finance market encompasses successful business strategies deployed by the key vendors. The alternative finance market is fragmented and the vendors are deploying growth strategies such as organic and inorganic strategies to compete in the market.
Product Insights and News
- CircleUp Network Inc. - The company offers credit loans to businesses.
To make the most of the opportunities and recover from post COVID-19 impact, market vendors should focus more on the growth prospects in the fast-growing segments, while maintaining their positions in the slow-growing segments.
The alternative finance market forecast report offers in-depth insights into key vendor profiles. The profiles include information on the production, sustainability, and prospects of the leading companies.
Alternative Finance Market Value Chain Analysis
Our report provides extensive information on the value chain analysis for the alternative finance market, which vendors can leverage to gain a competitive advantage during the forecast period. The end-to-end understanding of the value chain is essential in profit margin optimization and evaluation of business strategies. The data available in our value chain analysis segment can help vendors drive costs and enhance customer services during the forecast period.
The report has further elucidated on other innovative approaches being followed by vendors to ensure a sustainable market presence.
Which are the Key Regions for Alternative Finance Market?
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73% of the market's growth will originate from APAC during the forecast period. China and Indonesia are the key markets for alternative finance in APAC. Market growth in this region will be faster than the growth of the market in Europe and MEA regions.
The increasing penetration of the Internet and smartphones, the rapid growth of social media, the increasing number of SMEs and startups, the rising adoption of online platforms for lending, and the presence of global and regional vendors will facilitate the alternative finance market growth in APAC over the forecast period. This market research report entails detailed information on the competitive intelligence, marketing gaps, and regional opportunities in store for vendors, which will assist in creating efficient business plans.
COVID Impact and Recovery Analysis
The increasing prevalence of COVID-19 in 2020 has adversely impacted the growth of the market in focus in the region. According to stats, on April 29, 2020, the total number of COVID 19 cases in Asia was recorded around 39 million. Countries such as India, China, and Bangladesh were severely affected by the pandemic in the region. Especially in India, the second wave of COVID 19 has resulted in a drastic increase in the number of new cases and mortality. For instance, according to stats provided by MOHFW (Ministry of Health and Family Welfare), on March 11, 2021, the total number of new cases in India was 21,668, which increased to 386,888 on April 29, 2021. Similarly, the total number of deaths reached 208,313 on April 29, 2021, from 18,669 on July 3, 2020. The outbreak of the pandemic led to a decline in banking operations. However, the rising utilization of digital media for financial transactions and rollout of vaccines by various countries in the region will enhance the regional business scenario, which, in turn, will result in the growth of the market in the region during the forecast period.
What are the Revenue-generating Type Segments in the Alternative Finance Market?
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The alternative finance market share growth by the P2P lending will be significant during the forecast period. The P2P consumer lending sub-segment holds a major share of the P2P lending segment due to the growth in the number of online consumer lending platforms and the increasing use of technology in financial transactions.
Besides the above-mentioned factors, the post COVID-19 impact has brought forth a slowdown in or fast tracked the demand for the service or product. This report provides an accurate prediction of the contribution of all the segments to the growth of the alternative finance market size and actionable market insights on post COVID-19 impact on each segment.
Alternative Finance Market Scope
Growth momentum & CAGR
Accelerate at a CAGR of 10%
Market growth 2021-2025
$ 176.15 billion
YoY growth (%)
APAC, North America, Europe, South America, and MEA
Performing market contribution
APAC at 73%
Key consumer countries
China, US, UK, Germany, and Indonesia
Leading companies, Competitive strategies, Consumer engagement scope
Key companies profiled
CircleUp Network Inc., Crowdfunder Ltd., Fundable LLC, Funding Circle Holdings Plc, Fundrise LLC, GoFundMe Inc., Indiegogo Inc., Kickstarter PBC, LendingClub Corp., and Patreon Inc.
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.
What are the Key Data Covered in this Alternative Finance Market Report?
- CAGR of the market during the forecast period 2021-2025
- Detailed information on factors that will drive alternative finance market growth during the next five years
- Precise estimation of the alternative finance market size and its contribution to the parent market
- Accurate predictions on upcoming trends and changes in consumer behavior
- The growth of the alternative finance industry across APAC, North America, Europe, South America, and MEA
- A thorough analysis of the market's competitive landscape and detailed information on vendors
- Comprehensive details of factors that will challenge the growth of alternative finance market vendors
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1 Executive Summary
2 Market Landscape
- 2.1 Market ecosystem
- Exhibit 01: Parent market
- 2.2 Market characteristics
- Exhibit 02: Market characteristics
- 2.3 Value chain analysis
- Exhibit 03: Value chain analysis: Specialized consumer services
3 Market Sizing
- 3.1 Market definition
- Exhibit 04: Offerings of vendors included in the market definition
- 3.2 Market segment analysis
- Exhibit 05: Market segments
- 3.3 Market size 2020
- 3.4 Market outlook: Forecast for 2020 - 2025
- Exhibit 06: Global - Market size and forecast 2020 - 2025 ($ billion)
- Exhibit 07: Global market: Year-over-year growth 2020 - 2025 (%)
- 3.5 Type of financial models in alternative finance
4 Five Forces Analysis
- 4.1 Five forces analysis
- Exhibit 08: Five forces analysis 2020 & 2025
- 4.2 Bargaining power of buyers
- Exhibit 09: Bargaining power of buyers
- 4.3 Bargaining power of suppliers
- Exhibit 10: Bargaining power of suppliers
- 4.4 Threat of new entrants
- Exhibit 11: Threat of new entrants
- 4.5 Threat of substitutes
- Exhibit 12: Threat of substitutes
- 4.6 Threat of rivalry
- Exhibit 13: Threat of rivalry
- 4.7 Market condition
- Exhibit 14: Market condition - Five forces 2020
5 Market Segmentation by Type
- 5.1 Market segments
- 5.2 Comparison by Type
- 5.3 P2P lending - Market size and forecast 2020-2025
- Exhibit 17: P2P lending - Market size and forecast 2020-2025 ($ billion)
- Exhibit 18: P2P lending - Year-over-year growth 2020-2025 (%)
- 5.4 Crowdfunding - Market size and forecast 2020-2025
- Exhibit 19: Crowdfunding - Market size and forecast 2020-2025 ($ billion)
- Exhibit 20: Crowdfunding - Year-over-year growth 2020-2025 (%)
- 5.5 Invoice trading - Market size and forecast 2020-2025
- Exhibit 21: Invoice trading - Market size and forecast 2020-2025 ($ billion)
- Exhibit 22: Invoice trading - Year-over-year growth 2020-2025 (%)
- 5.6 Market opportunity by Type
- Exhibit 23: Market opportunity by Type
6 Customer landscape
7 Geographic Landscape
- 7.1 Geographic segmentation
- 7.2 Geographic comparison
- 7.3 APAC - Market size and forecast 2020-2025
- 7.4 North America - Market size and forecast 2020-2025
- 7.5 Europe - Market size and forecast 2020-2025
- 7.6 South America - Market size and forecast 2020-2025
- 7.7 MEA - Market size and forecast 2020-2025
- 7.8 Key leading countries
- 7.9 Market opportunity by geography
8 Drivers, Challenges, and Trends
- 8.1 Market drivers
- 8.2 Market challenges
- 8.3 Market trends
9 Vendor Landscape
- 9.1 Vendor landscape
- 9.2 Landscape disruption
- 9.3 Competitive scenario
10 Vendor Analysis
- 10.1 Vendors covered
- 10.2 Market positioning of vendors
- 10.3 CircleUp Network Inc.
- 10.4 Crowdfunder Ltd.
- 10.5 Fundable LLC
- 10.6 Funding Circle Holdings Plc
- 10.7 Fundrise LLC
- 10.8 GoFundMe Inc.
- 10.9 Indiegogo Inc.
- 10.10 Kickstarter PBC
- 10.11 LendingClub Corp.
- 10.12 Patreon Inc.
- 11.1 Scope of the report
- 11.2 Currency conversion rates for US$
- 11.3 Research methodology
- 11.4 List of abbreviations
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
- Market size and forecast
- Market segmentation
- Geographical insights
- Competitive landscape
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Frequently Asked Questions?
- better returns for investors
- rapid growth in APAC
Key Questions Answered
- What are the key global market and the regional market share?
- What are the revenue-generating key market segments?
- What are the key factors driving and challenging this market’s growth?
- Who are the key market vendors and their growth strategies?
- What are the latest trends influencing the growth of this market?
- What are the variables influencing the market growth in the primary regions?
- What are the factors influencing the growth of the parent market?
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