Market Analysis and Insights:
At a projected CAGR of 27.3%, the Global Peer to Peer (P2P) Lending Market is anticipated to grow from an estimated size of USD 150 billion in 2022 to USD 1.5 trillion by 2032.
The rising demand and necessity for money and loans is one of the primary elements driving the rise of the worldwide peer-to-peer (P2P) lending business.
Peer to Peer (P2P) Lending Market Scope :
Metrics | Details |
Base Year | 2022 |
Historic Data | 2022-2023 |
Forecast Period | 2022-2032 |
Study Period | 2022-2032 |
Forecast Unit | Value (USD) |
Revenue forecast in 2032 | USD 1.5 trillion |
Growth Rate | CAGR of 27.3% during 2022-2032 |
Segment Covered | by Type, By End User, By Business Model ,By Region. |
Regions Covered | North America, Europe, Asia Pacific, South America Middle East and Africa |
Key Players Profiled | LendingClub, Prosper, Funding Circle, Upstart, Zopa, OnDeck, RateSetter, Social Finance, Avant, Kabbage, and CircleBack Lending. |
Market Definition:
Peer-to-peer (P2P) lending is a method of providing credit or loans to businesses and individuals via Internet applications or websites. Peer-to-peer (P2P) lending services are relatively inexpensive. Peer-to-peer (P2P) lending, on the other hand, is viewed as an insecure financial service .P2P lending is a sort of monetary operation in which individuals lend and borrow money from one another without the involvement of a typical financial intermediary such as a bank. The P2P platform functions as a middleman between buyers and sellers in marketplace lending.
Key Market Segmentation:
Insights based on End Use :
The consumer lending segment is predicted to control the bulk of the worldwide Individuals and other businesses provide loans to businesses through peer-to-peer lending platforms. Business lending can be utilized for many different things, including initial expenses, financing needs, and expansion. The offering of loans to individuals for personal use, such as consolidating debt, home repair, and medical bills, is known as consumer lending. The consumer lending segment is the largest of the two, accounting for more than 70% of the global P2P lending business.
Insights based on Application:
The Consumer credit loans category are expected to contribute to the majority of the market share. Consumer credit loans are the most common type of P2P lending, Consumer credit loans account for 45% of total market volume, followed by Small company loans (35%). This is because consumer credit loans are often smaller and easier to underwrite than small business loans. Student loans and real estate loans are smaller market segments, but they are fast expanding. Small company loans are also a significant component of the P2P lending market. P2P lending can be an important source of funding for small firms that may struggle to acquire loans from traditional banks. Student loans and real estate loans are minor but rising components of the P2P lending business. For borrowers seeking alternate options for financing for these types of loans, peer-to-peer lending may be a useful option.
Insights based on Type:
The Marketplace lending category dominates the worldwide Peer to Peer (P2P) Lending market, capturing more than 55% of the market in 2022. Marketplace lending is the dominant business model in the global P2P lending market. In marketplace lending, the P2P platform acts as a facilitator between lenders and borrowers. The platform screens and rates borrowers, and then matches them with lenders who are willing to invest in their loans. The platform also oversees the repayment of loan collection and distribution to lenders.
Marketplace lending provides lenders with the chance to engage in a diverse portfolio of loans with varying risk profiles. Marketplace financing frequently offers reduced rates of interest than traditional lending. Traditional lending is a business model in which the P2P platform itself acts as a lender. Traditional lending is a significant component of the global P2P lending sector. Traditional lending platforms can provide greater sums of money and longer repayment terms to borrowers than marketplace lending platforms. Furthermore, traditional lending platforms can supply consumers with credit even if their credit history is bad.
Insights on Regional Analysis:
North America Region to Provide Numerous Financing Opportunities. With a market share of more than 30% in 2022, North America dominated the P2P lending market. Europe and Asia Pacific are the other two key markets, with approximately 20% and 15% market shares, respectively. The markets in the Middle East, Africa, and South America are still small, but they are expanding rapidly. North America’s peer-to-peer lending market is robust and well-established. The increasing popularity of alternative lending choices, the rising need for small company loans, and the expanding acceptance of P2P lending by traditional financial institutions are all factors driving market expansion. The European peer-to-peer lending business continues to remain in its early phases, although it is fast growing. Factors driving market expansion include expanding demand for alternative lending choices, the growing popularity of crowdfunding, and a favorable regulatory environment. The Asia Pacific P2P lending market is the world’s fastest expanding. The market’s growth is being driven by a huge and underserved population, increased internet and smartphone adoption, and a favorable regulatory environment. The Middle East and Africa P2P lending market is still in its early phases of development. However, the market is rapidly expanding as a result of factors such as rising demand for alternative lending options.
Company Profiles:
The Peer to Peer (P2P) Lending market is a dynamic and competitive one. The leading companies are always inventing and releasing new products. New competitors from emerging markets are also entering the market.
Major players in the global Peer to Peer (P2P) Lending market include LendingClub, Prosper, Funding Circle, Upstart, Zopa, OnDeck, RateSetter, Social Finance, Avant, Kabbage, and CircleBack Lending. To enhance their market share, these corporations are actively investing in developing novel products, and promotional activities, and extending their distribution networks. P2P lending companies are also moving into new local and foreign markets. The increased demand for P2P financing from both investors and lenders is driving this expansion. To suit the needs of borrowers and investors, businesses are continually developing and offering new products and services.
COVID-19 Impact and Market Status:
The COVID-19 pandemic had a mixed influence on the global Peer to Peer (P2P) Lending business. The global peer-to-peer (P2P) lending market was only moderately affected by the COVID-19 outbreak. On the one hand, many borrowers experienced financial insecurity, resulting in a drop in loan demand. People were concerned about their employment and income, therefore they were less inclined to use P2P lending sites to borrow money. Lenders, on the other hand, grew more cautious, worried that borrowers would be unable to repay their loans due to economic insecurity. Because of this cautious approach, the supply of loans from P2P lenders has decreased. As a result of these issues, the P2P lending market’s growth will decrease in 2020. However, the marketplace began to rebound in 2021, when the global economy reopened and economic activity increased. The COVID-19 outbreak had a mixed influence on the P2P lending sector overall. It reduced loans both supply and demand in the short term, but the market is likely to grow in the long term. The pandemic also increased loan defaults on peer-to-peer networks. This was caused by several circumstances, notably loss of employment, income cuts, and closures of businesses.
During the pandemic, authorities around the world extended financial assistance to P2P lenders and borrowers. This helped to lessen the market’s damage from the pandemic. Despite these obstacles, the P2P lending business is anticipated to expand in the long run. This is due to a variety of factors, including the growing popularity of alternative lending choices, the increased usage of technology in the financial services sector, and the growing need for credit from small firms and individuals.
Latest Trends and Innovation:
• LendingClub, one of the world’s leading P2P lending networks, has recently introduced a new product named “LendingClub GO.” This program provides borrowers with fast access to loans of up to $1,000 with no credit check.
• Prosper (United States): Prosper, another prominent peer-to-peer lending network in the United States, recently teamed with Visa to develop the “Prosper Credit Card. ”This card allows borrowers to earn rewards that can be used to pay down their Prosper loans
• Funding Circle, a peer-to-peer lending network for small enterprises, has recently entered the Dutch market. This is the firm’s fifth European market.
• Upstart (United States): Upstart, a peer-to-peer lending platform that assesses customers’ creditworthiness using artificial intelligence, has recently released a new product dubbed “Upstart Auto Refinance.” Borrowers can use this product to refinance their auto loans at a cheaper interest rate.
• Lending Tree, an economic marketplace that connects consumers and lenders, has just released a new tool called “Lending Tree Loan Finder.” Borrowers can use this product to compare loan offers from numerous lenders in one spot.
Significant Growth Factors:
The following are important growth factors for the Peer to Peer (P2P) Lending Market Artificial intelligence (AI), machine learning, and big data analytics are rapidly being used by P2P lending platforms to speed the application for a loan, assess risk, and match borrowers with lenders. P2P lending has become more efficient and user- friendly as a result, bringing more borrowers and investors to the industry. The rapid global expansion of broadband penetration has made it easier for investors and lenders to access P2P lending.
This is especially appealing to consumers with a weak credit record or who require a rapid loan. P2P lending has emerged as an appealing investment choice for consumers pursuing greater returns than conventional investment options, as investor interest for new investment possibilities grows. By broadening their investment portfolios, investors are enticed to the prospect of competitive yields.
Restraining Factors:
The market for Peer to Peer (P2P) Lending is expanding quickly, but there are several impediments to its expansion. Unlike traditional banks, P2P lending platforms often lend to borrowers with poorer credit scores. This means that debtors are more likely to default on their loans. In many countries, there is a lack of regulation because P2P lending is a relatively new industry. This might make determining the risk of investing in P2P loans challenging for investors. Many individuals are still unaware of the concept of peer- to-peer financing or how it works. This reduces the number of borrowers and investors participating in the market. A variety of high-profile examples of fraud have occurred on P2P lending sites. As a result, some investors are leery of investing in P2P loans.
Despite these impediments, the P2P lending business is likely to expand in the future years. This is due to a variety of factors, including the growing popularity of Internet lending, increased desire for alternative lending choices, and the development of new technologies that make P2P lending more efficient and secure.