According to a recent report published by Allied Market Research, titled, “FinTech Lending Market By Offering, Business Model, Enterprise Size, and Lending Channel: Global Opportunity Analysis and Industry Forecast, 2021–2030”, the global FinTech lending market size was valued at $449.89 billion in 2020, and is projected to reach $4,957.16 billion by 2030, growing at a CAGR of 27.4% from 2021 to 2030.
FinTech lender checks financial and banking history of individuals & businesses borrowing through FinTech firms. Moreover, to maximize the benefits of borrowing from FinTech lenders, consumers need to provide direct access of records through a cloud-based accounting software package and banking data permissions. In addition, bank permission allows FinTech lenders to run their analytical tools to speed up the credit decisions, which is driving the FinTech Lending market growth.
Furthermore, rapid growth of the FinTech lending industry is attributed to continuous increase in digitalization initiatives among financial organizations and surge in government initiatives for FinTech lending in the developing countries, such as India and China. In addition, technological advancements such as integration of AI in FinTech lending platforms and rapid penetration of cloud-based platforms are expected to present potential growth opportunities for the FinTech lending market in the near future.
During the COVID-19 outbreak, the FinTech lending market has been affected by massive increase in outstanding default rates. For instance, according to the World Bank Group, FinTech lending declined 8% by volume of transactions and there is an increased outstanding loan defaults by nearly 9% in the year 2020.
By offering, the business lending segment acquired major market share. As it involves simple process of documents verification, quick approval of loan amounts, and processes secured transaction, which therefore, accelerates the growth of this segment during the forecast period.
Region wise, North America dominated the FinTech lending market in 2020, and is expected to maintain its market position during the forecast period. Advancements in FinTech lending have led to the development of interactive and consumer-friendly user interface of websites and applications, thus shifting the preference of consumers toward lending services, which is becoming major FinTech lending market trends. North America is the most advanced collection and recovery consumer base, fueled by the presence of major global players and high youth population with high product awareness. This region is expected to continue to hold a prominent share in the global market in the future.
However, Asia-Pacific is expected to grow at the highest CAGR during the forecast period, owing to rise of the digital lending landscape supported by increase in number of start-ups and several government initiatives toward FinTech lending across the developing countries such as China, India, and Japan. In addition, favorable government initiatives to support start-ups have paved way for high number of small & medium-sized businesses, which, in turn, has created lucrative opportunities for a number of FinTech lenders in the region.
During the COVID-19 pandemic, FinTech lending firms have seen an invariable rise in cyber threats, as there was huge number of loan applications and circulation of faulty information as these firms are increasingly exploring complex technologies such and adopting hybrid cloud technology. In addition, owing to this surge in technological adoption & change in business models, securities over consumer data & financial information have become a major concern in the market.
Key Findings of the Study
- By business model, the balance sheet lenders led the highest FinTech lending market share, in terms of revenue in 2020.
- On the basis of lending channel, the online segment is expected to exhibit the fastest growth rate during the forecast period.
- Region wise, North America generated the highest revenue in 2020.
The key players operating in the FinTech lending market analysis include Avant, LLC, Braviant Holdings, Fundbox, Funding Circle, Kabbage Funding, LendingClub Bank, OnDeck, RateSetter, Social Finance Inc., and Tavant. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.