The Digital Lending Market was valued at USD 311.06 billion in 2020 and is expected to reach USD 587.27 billion by 2026 and register a CAGR of approximately 11.9% during the forecast period (2021 - 2026).
The Lending landscape has changed drastically over the years due to the rapid adoption of digitization in the BFSI industry. The traditional form of lending still prevails in many parts of the world. However, the benefits provided by the digital solution providers are increasingly paving the way for the adoption of digital lending solutions and services across the enterprises.
Another major factor driving the growth of the market studied is the changing consumer expectation and behavior due to the several benefits offered by the digitization of banking and financial services. The customers may range from diversified backgrounds and may require the loan for a variety of purposes ranging from personal loans to SME finance and home loans, amongst many others.
Further, the adoption of several technological advancements, such as the proliferation of adoption of smartphones has led to an increase in the adoption of digital banking across several end-user verticals. Also, technologies like Artificial Intelligence, Machine Learning, and Cloud Computing benefit the banks and fintech as they can process huge amounts of information about customers. This data and information are then compared to obtain results about suitable services/solutions that customers want, which has aided, essentially, in developing customer relations.
Aire, Kabbage, and Kasisto are some of the most prominent financial sector startups that have fully invested in AI. For instance, Kabbage uses AI algorithms that assess all risks of lending money to a certain customer, and it allows managers of the company to give loans in minimal time. The demand for personalization of their needs among consumers in the fintech and banking companies have further strengthened the demand for AI.
Moreover, due to the Covid-19 pandemic, SMEs across the globe are facing challenges to raise funds during the crisis to keep their businesses operating. Digital Lending is expected to find several opportunities, especially amongst the SMEs for growth and adoption. For instance, in April 2020, India Lends launched Digital Lending 2.0, a range of touchless and contactless products, including loans, insurance, and a line of credit. The new offering is expected to provide its consumers with quick and effective financial solutions during and after the nationwide lockdown paving the way for a new normal.
Key Market Trends
Increasing Number of Potential Loan Purchasers with "Digital Behavior"
The latest "Expectations & Experiences consumer trends" survey from Fiserv, Inc. a leading global provider of financial services technology solutions, states that almost two thirds of people who have applied for loans in the past two years now do so either partially or fully online, representing a significant increase from 2018. A major portion of this growth is due to increasing usage of smartphone and tablet.
Millennials who have a few years of work experience and no credit history (or the new-to-credit segment) find that their loans are either not approved, or come at high rates of interest. Moreover, in traditional banks, the "time to decision" for small businesses and corporate lending averages between three and five weeks; Average "time to cash" is nearly three months. Such challenges are driving the "digital behavior" of customers who are turning to mobile devices in order to access the digital lending applications.
The increase in digital behavior is also augmented by government regulations. For instance, in September 2020, Thailand's central bank published new measures for the growing digital personal loan market. It also recommended that loan providers apply more digital technology for operational processes such as loan offering, debt repayment, and information disclosure, such as interest rates, fees, and penalties.
The competitive landscape of the Digital Lending Market is moderately fragmented owing to the presence of several solution providers, with none of them holding a majority share in the market. The market players are making several innovations to improvise their offerings and gain maximum market traction.
The emerging players in the market are strategically raising funds to provide innovative and technologically integrated solutions. The market players are also viewing strategic collaborations as a lucrative path towards growth.
Key Topics Covered:
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKETDYNAMICS 4.1 Market Overview 4.2 Industry Stakeholder Analysis 4.3 Industry Attractiveness - Porter's Five Forces Analysis 4.4 Important Touchpoints of Potential Loan Purchasers 4.5 Market Drivers 4.5.1 Increasing Number of Potential Loan Purchasers with Digital Behavior 4.6 Market Challenges 4.6.1 Privacy and Security Issues 4.7 Impact of COVID-19 on the Digital Lending and Allied Markets
5 MARKET SEGMENTATION 5.1 Type 5.1.1 Business 5.1.2 Consumer 5.2 Geography
6 COMPETITIVE LANDSCAPE 6.1 Company Profiles 6.1.1 Spot Cap 6.1.2 Asia Kredit Holding 6.1.3 Finastra 6.1.4 Oriente 6.1.5 Provident Bank (Provident Financial Services Inc.) 6.1.6 Ferratum Oyj 6.1.7 International Personal Finance PLC(IPF) 6.1.8 Klarna Bank AB 6.1.9 Kaspi Bank JSC 6.1.10 CAN Capital Inc. 6.1.11 Lendingtree Inc. 6.1.12 Kabbage Inc. 6.1.13 Kiva Microfunds 6.1.14 Upstart Network Inc. 6.1.15 Social Finance Inc. (SoFi) 6.1.16 Funding Circle Limited? (Funding Circle Holdings PLC) 6.1.17 World Business Lenders 6.1.18 Prosper Marketplace Inc. 6.1.19 On Deck Capital Inc. 6.1.20 LendInvest Limited 6.1.21 LendingClub Corp. 6.1.22 Zopa Limited