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Global Digital Lending Market size is estimated to increase by USD 19.14 billion and grow at a CAGR of 19.89% between 2022 and 2027. The expansion of the digital lending market relies on various factors, such as the adoption of advanced technologies throughout the lending process, the rise of digitalization, and the trend toward urbanization in smart cities. However, several challenges impede this growth trajectory. These encompass compliance and regulatory hurdles intertwined with lending practices, as well as privacy and security apprehensions associated with digital lending transactions. Additionally, the persistence of high-interest rates in digital lending poses a significant obstacle. Overcoming these challenges requires a concerted effort from stakeholders to navigate regulatory complexities, bolster privacy measures, and explore avenues for interest rate optimization. By addressing these issues, the digital lending sector can cultivate a more conducive environment for sustained growth and innovation, ensuring its continued relevance in the evolving landscape of financial services.
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This market report extensively covers market segmentation by component (solution and service), deployment (on-premises and cloud), and geography (North America, APAC, Europe, South America, and the Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges.
The solution segment is estimated to witness significant growth during the forecast period. Digital lenders such as Fiserv, Inc. (Fiserv), and Fidelity National Information Services are reducing loan processing times by technological advances in the lending landscape, which can be of massive importance to borrowers that require quick access to funds.
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The solution segment was the largest segment and was valued at USD 3.94 billion in 2017. Due to a rising number of fintech startups and financial institutions offering services, there is scope for further improvement in the landscape through the introduction of innovative solutions. As per Forbes, the number of digital wallet users is likely to be expected to grow from 2.3 billion users in 2020 to 4.4 billion users by 2025 mostly due to the ease of applying for and receiving loans. Hence, as a result of the various factors discussed above, the solutions segment is predicted to witness growth during the forecast period.
North America is estimated to contribute 33% to the growth of the global market during the forecast period.
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Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. In the North American region, demand is predicted to increase during the forecast period. This is due to commercial lending companies in the US like Pegasystems Inc. (Pegasystems), Finastra, and HES FinTech improving their customer experience by increasing investment in AI and IoT technologies. Small businesses, particularly entrepreneurs from the migrant population, prefer digital lending and micro-loans for their business expansion efforts.
In the realm of digital lending, financial institutions are increasingly leveraging technology and data analytics to enhance their operations. Revenue per loan is a critical metric driving decision-making, influenced by factors such as loan applications, creditworthiness assessment, and efficient loan disbursement processes. Personal loans, business loans, and student loans are all being facilitated through digital channels, often accessed via smartphones and other mobile devices. Mobile payments and mobile banking are transforming the landscape of financial transactions alongside online banking services. However, cybersecurity remains a paramount concern, necessitating the integration of artificial intelligence, machine learning, and blockchain technologies. Regulations play a crucial role in shaping the digital lending landscape, impacting interest rates and governing responses to cyberattacks and data breaches, particularly concerning personal information security. Prioritizing customer satisfaction through digitalization and optimizing customer experience are key strategies for financial institutions navigating the digital lending space.
The use of advanced technologies in the lending process is significantly driving market growth. Cloud-based payment platforms have helped financial organizations in rapid data collection and offering services such as the initiation of quick disbursal of loans. Other digital platforms, like in-memory databases and columnar databases, help reduce paper usage and allow ease of access with a simple network connection. AI and data analytics, adopted by Newgen Software Technologies Limited (Newgen) and other platforms, allow online loan management, assessment, and disbursal and improve risk and data management.
Additionally, these features help ensure financial institutes have greater ease of collecting interest, principal, and payments from their borrowers. Streamlining core business and loan operations in the financial sector is also another advantage that AI-based technologies allow. These factors are likely to propel the growth of the global market during the forecast period.
The rise in the adoption of cloud-based digital lending servicing software offerings is a key trend in the market. The shift towards cloud computing from on-premises-based services is largely due to its scalability and cost-effectiveness. Its ease of implementation, reduced capital expenditure, and improved data accessibility are also reasons it is increasingly preferred. Vendors such as LendFoundry in the US have improved customer experience by the provision of tools and accelerators for customer management, compliance reporting, authentication, security, and creditworthiness.
Additionally, some market players are forming partnerships and collaborations to introduce cloud-based solutions for financial institutes and expand their customer base. Hence, the increased usage of cloud-based loan servicing software is one factor that can propel the growth of the global market during the forecast period.
Compliance and regulatory challenges related to lending are hindering market growth. Regulatory bodies set down requirements, regulations, compliances, and guidelines for maintaining financial integrity in the market, and in recent years, these have observed massive changes. Hence, adherence to these rules and regulations is vital for lenders to display financial stability. For example, Basel III is a standard regulation consisting of a collection of international banking regulations framed by the Bank for International Settlements that all global financial institutions must adhere to.
Additionally, these compliances will vary from region to region, and upon starting operations in a new region, a lender must recognize and comply with regulations set out by regional governments or financial bodies. Hence, for the same reason, compliance management is increasingly being solved by innovative technology-driven solutions that also lower costs associated with compliance. Hence these factors shall restrain the growth of the market during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Built Technologies Inc. - The company offers digital lending, such as built construction loan administration software, which provides real-time visibility to construction portfolios while simplifying the complex loan administration process.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
The market is experiencing exponential growth, driven by advancements in technology and changing consumer behaviors. Loan applications and loan disbursement processes have been streamlined through digital platforms, catering to both personal loans, business loans, and student loans. Smartphones and mobile devices have become indispensable tools for accessing mobile payments, mobile banking, and online banking services, necessitating robust cybersecurity measures, including artificial intelligence, machine learning, and blockchain technologies to safeguard personal information. Interest rates and financial security remain key concerns amidst rising cyberattacks and data breaches. Digital remittance services cater to the needs of migrant workers, facilitating cross-border transactions and mobile money transfers. Regulatory requirements, including anti-money laundering (AML) and know your customer (KYC) standards, shape the landscape for banks, money transfer operators, and online platforms. As global migration continues, the market evolves to meet the demands of international residents while complying with authorized regulators.
In the realm of digital finance, the landscape is shaped by a multitude of factors, from revenue per loan to customer satisfaction, particularly for micro, small, and medium-sized enterprises (MSMEs). The effectiveness of digital platforms hinges on robust telecom infrastructure and high internet speeds, crucial for the services segment and consulting firms navigating the realm of digital transfer platforms and online transactions. Electronic devices, especially mobile devices, drive cross-border transactions and payments, though concerns over money transfer costs persist. The digital remittance business, while facilitating international remittances, faces challenges such as security barriers against money laundering and terrorism funding. Digital payments, wire transfer services, and electronic wallets strive to uphold anti-money laundering (AML) standards while enhancing convenience for users. As the digital finance ecosystem evolves, addressing the needs of low-wage migrant workers and ensuring the integrity of cross-border transactions remain paramount.
Digital Lending Market Scope |
|
Report Coverage |
Details |
Page number |
150 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 19.89% |
Market growth 2023-2027 |
USD 19.14 billion |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
18.25 |
Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
Performing market contribution |
North America at 33% |
Key countries |
US, China, Japan, Germany, and France |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
Abrigo, ARGO Data Resource Corp., Built Technologies Inc., CoreLogic Inc., CU Direct Corp., Decimal technologies, Fidelity National Information Services Inc., First American Financial Corp., Fiserv Inc., Intellect Design Arena Ltd., Intercontinental Exchange Inc., Juris Technologies Sdn Bhd, Newgen Software Technologies Ltd., Nucleus Software Exports Ltd., Pegasystems Inc., Sigma Infosolutions, Tavant, Temenos AG, UAB HES Europe, and Vista Equity Partners Management LLC |
Market dynamics |
Parent market analysis, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Component
7 Market Segmentation by Deployment
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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