Global transactions of online alternative finance, excluding China, increased 24 per cent year-on-year to reach $113bn (£81.6bn) in 2020 with the UK rising to second place in the rankings of global alternative lending.
The second Global Alternative Finance Market Benchmarking Report from the Cambridge Centre for Alternative Finance (CCAF) revealed that growth in global transactions of online alternative finance in 2020 followed a three per cent rise from 2018 to reach $91bn in 2019.
After market developments and regulatory changes in China caused its share of the global market volume to fall to less than one per cent in 2020, the United States became the largest national market with $73.62bn or 65 per cent of global volume. The UK ($12.64bn) has the second largest with 11 per cent of global volume.
This is followed by Asia Pacific excluding China ($8.9bn), Latin America & The Caribbean ($5.27bn), Sub-Saharan Africa ($1.22bn), China ($1.16bn) and the Middle East & North Africa ($0.59bn).
Business lending became more prominent in 2020, rising from representing 38 per cent of 2019’s volumes of online alternative finance to 47 per cent last year.
Online alternative funding for business mostly came from debt-based models, with $32.8bn of debt finance raised in 2019, representing 96 per cent of all business funding, and $49.6bn raised in 2020 (94 per cent).
Donation-based crowdfunding during the period of 2019 to 2020 grew by 160 per cent annually to reach $7bn in total volume in 2020.
“This study, and the resultant report, illustrates just how resilient the online alternative finance market has been when you consider the impact of a global pandemic throughout the majority of 2020,” said Robert Wardrop, director and co-founder of CCAF.
“Taking aside events in China, a global volume growth of 24 per cent against a backdrop of Covid-19 shows how alternative finance instruments have been able to respond to the rapidly evolving needs of micro, small and medium-sized enterprises and consumers alike.”
“This report is a testimony to the resilience of the alternative finance industry in light of the significant challenges it has faced since its birth,” said Tania Ziegler, global benchmarking lead at the CCAF.
“The industry has delivered healthy growth during both 2019 and 2020, indicating that it has played a supporting role in helping stakeholders through the challenges that unfolded with the COVID-19 outbreak.
“We have seen ample evidence of flexible and creative responses by industry players to both the challenges and opportunities that have emerged in the past two years.”